Gold prices are set to extend their impressive rally in the near future, according to a leading market analyst. This bullish outlook comes on the back of shifting monetary policy expectations in the United States and persistent economic uncertainties.
Analyst Bullish on Precious Metals
Praveen Singh, Senior Fundamental Research Analyst for Currencies and Commodities at Mirae Asset Sharekhan, forecasts a continued upward trajectory for gold. He highlights that the probability of a December rate cut by the US Federal Reserve has surged to 88%, a dramatic increase from 24% just days earlier on November 20. This shift is a primary driver for the precious metal's strength.
The analyst's view is reinforced by recent comments from Fed officials and the potential appointment of Kevin Hassett, a candidate aligned with former President Trump's economic policies, as the next Fed Chair. Hassett is known to favour rate cuts, boosting expectations for easier monetary policy.
Market Performance and Key Drivers
Gold has demonstrated remarkable strength, advancing for the fourth consecutive month in November with a gain of 5.75%. In the week ending November 28, it surged 4.25%. At the time of reporting, spot gold was trading around $4230, while the MCX February gold contract in India was up 0.77% at Rs 130,499.
Supporting this price action is robust investment demand. Global gold ETF holdings reached 97.503 million ounces (MOz) as of November 28, their highest level since October and near a three-year peak. Meanwhile, COMEX gold inventories have declined significantly, down 19.34% from their record peak in April.
A recent Goldman Sachs survey of over 900 clients revealed strong bullish sentiment, with 70% expecting higher prices by end-2026. Notably, 36% of respondents see gold topping $5,000 per troy ounce by that time, citing continued central bank demand and fiscal worries.
Economic Backdrop and Price Outlook
The economic data presents a mixed but concerning picture. In the US, manufacturing activity contracted for the ninth straight month, with the ISM Manufacturing Index hitting a one-year low. Employment components also weakened. In China, official manufacturing PMI remained in contraction for the eighth consecutive month.
Given this environment and the dovish Fed pivot, Singh's outlook for gold is positive. He identifies a near-term target of $4381, which would be an all-time high, with support levels at $4160 and $4100. The US Dollar Index trading lower at 99.10 further aids dollar-denominated gold.
Silver Joins the Rally
The bullish momentum is not confined to gold. Spot silver surged over 3% to $58.28, building on a massive 13% weekly gain. The metal is benefiting from huge ETF inflows, Fed rate cut hopes, and a critical inventory dislocation. Silver inventories in Chinese warehouses have plummeted to near decade-lows.
The Gold/Silver ratio has broken below a key long-term support level of 73.25, which could propel silver further. The analyst suggests silver could extend its rally to the $62-$65 range in the coming weeks and months, advising investors to buy on dips with a stop-loss below $54.
Note for Indian Investors: Domestic precious metals prices are receiving an additional boost from the rupee's movement, as the USD-INR hit a fresh record high on December 1, amplifying gains in rupee terms.
(Disclaimer: Recommendations and views expressed are the analyst's own and do not represent the views of The Times of India.)
