Gold prices in India extended their losses for a second consecutive session on Friday, December 19, weighed down by a strengthening US dollar. Despite the daily decline, the precious metal remained on track to close the week higher, buoyed by renewed market expectations for interest rate cuts from the US Federal Reserve in the coming year.
Daily Price Movement: Gold Slips, Silver Rebounds
The February gold futures contract on the Multi Commodity Exchange (MCX) opened lower at ₹1,34,031 per 10 grams, compared to its previous close of ₹1,34,521. The contract extended its decline, hitting an intraday low of ₹1,33,555, marking a drop of ₹966 from Thursday's closing level. This followed a 0.30% decline in the previous session.
In the international spot market, gold prices also softened, falling 0.53% to a low of $4,327 per ounce. They later pared some losses to trade at $4,329 per ounce, down 0.05% as of 8:00 PM.
In a contrasting move, silver prices staged a significant recovery after a steep fall in the previous session. The March silver futures contract on MCX opened higher at ₹2,02,899 per kilogram and gained momentum to reach a high of ₹2,06,280. This represented a sharp intraday increase of ₹3,390 per kilo.
Market Drivers: Dollar Strength Meets Rate Cut Hopes
The primary pressure on dollar-denominated gold came from a firmer US currency. The US dollar index, which measures the greenback against a basket of six major peers, climbed to over a one-week high of 98.74. This put the index on course for its first weekly gain in three weeks, making gold more expensive for holders of other currencies.
However, underlying support for bullion emerged from recent US economic data. The November consumer price index (CPI) showed a year-on-year increase of 2.7%, which was less than anticipated and marked a slowdown from the 3% rise seen in September. This tamer inflation reading has reinforced market confidence that the Federal Reserve will proceed with interest rate reductions next year. According to the CME FedWatch Tool, traders now price in a 58% probability of a policy easing move as early as March.
Analyst Views and Technical Outlook
Analysts provided a mixed near-term view for gold prices. Jateen Trivedi, VP and Research Analyst for Commodity and Currency at LKP Securities, noted that the stronger dollar was countering global firmness in bullion. He highlighted that market attention was shifting towards upcoming US economic indicators, including existing home sales and the Core PCE price index, for fresh directional cues. Trivedi expects gold to "remain volatile within a range of ₹1,31,500– ₹1,34,000" in the near term.
Rahul Kalantri, VP of Commodities at Mehta Equities, outlined specific support and resistance levels. For gold, he identified immediate support at ₹1,33,850–₹1,33,110, with resistance at ₹1,35,350–₹1,35,970. For silver, support is seen at ₹2,02,450–₹2,00,280, while resistance lies at ₹2,05,810–₹2,07,270.
Long-Term Bullish Forecast from Goldman Sachs
Adding to the longer-term optimism, global brokerage firm Goldman Sachs issued a bullish projection. In a note released on Thursday, the firm stated that gold prices could continue their record run, potentially rising another 14% to reach $4,900 per ounce by December 2026 in its base-case scenario. The brokerage attributed this outlook to structurally high demand from central banks and cyclical support from expected Federal Reserve rate cuts.
