Awaiting the US Federal Reserve‘s policy meeting, investors can anticipate gold prices to stabilize.
Central bank demand and geopolitical concerns are keeping bullion strong, as gold continues to rise above inflation-adjusted high. Due to industrial usage and ETF inflows, silver paralleled gold‘s increases, and economists predict that precious metals will continue to rise.
Gold Prices Face Correction
As investors await the results of the US Federal Reserve‘s policy meeting on September 17, experts predicted that gold prices would maintain their rise but would see some correction.
Additional indications for bullion are expected to come from the Bank of England‘s and the Bank of Japan‘s policy decisions, as well as inflation statistics from key countries like the UK and the Euro zone.
“Gold prices maintained their upward trend and ended the week higher for the fourth consecutive week, although the rate of increase slowed due to some consolidation in the middle of the week.
Gold Futures See Rally
“Investors are hesitant to buy new longs at present levels due to price movements of over 10% over the last four weeks,” Pranav Mer, Vice President, EBG-Commodity & Currency Research, JM Financial Services, told PTI.
He went on to say that the war between Russia and Ukraine, political changes in Europe and Asia, and geopolitical events in the Middle East are all contributing to the support for bullion.
The most traded gold futures for October delivery increased by Rs 1,616 or 1.5% on the Multi Commodity Exchange (MCX). On September 9, Comex gold futures ended at $3,686.40 an ounce in international trading before rising to $3,715.20
Gold Rally Boosted by Geopolitics
“Considering the effective 50% tariffs placed on Indian imports into the US and the ongoing escalation of the Russia-Ukraine conflict in recent weeks, the rally is not surprising,” stated Prathamesh Mallya, DVP-Research, Non-Agri Commodities and Currencies, Angel One.
“Gold continued its strong rally throughout the week, rising from already high levels to new record highs as changing macroeconomic circumstances bolstered its safe-haven appeal,” said Riya Singh, Research Analyst at Emkay Global Financial Services.
Gold and Silver
She pointed out that gold had gained more than 40% this year and has exceeded its inflation-adjusted 1980 record, reaching $3,700 an ounce. In developing nations, central banks have driven institutional demand, which has protected the industry from sluggish jewelry sales in China and India, she said.
A sustained break above the present levels, according to Singh, would lead to later this year’s $4,000 mark on Comex and Rs 1,15,000 per 10 grams on MCX.
With more pronounced increases, silver paralleled gold‘s bullish run. Comex silver futures reached an intraday high of $43.04, up 1.62 percent to $42.83 an ounce. Silver futures on the MCX jumped to a record high of Rs 1,29,392 per kilogram.
Silver Outperforms Gold
When it came to risk-on periods for precious metals, silver‘s larger beta helped it surpass gold on a percentage basis. Silver reached its best level since 2011 this week and has gained around 40% so far this year, Singh told PTI, adding that ETF inflows into the metal had surpassed 1.13 billion ounces, valued at over $40 billion.
Despite long-term support from its industrial applications in manufacturing and renewable energy, silver‘s price is still more erratic than gold‘s, she added. Singh said that “a medium-term increase approaching $43 per ounce on Comex and Rs 1,35,000-1,38,000 per kilogram on MCX is probable” if the trend keeps up.
Despite the potential for short-term correction, analysts said that the global central bank’s purchases, demand for safe havens, and prospects of policy easing are driving the precious metals market‘s overall upward trend.