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The Indian commodities market experienced a significant upswing on Thursday, December 26th, with gold prices reaching ₹78,850 per 10 grams, a ₹250 increase from the previous trading day. This rise mirrors a global trend, as international markets also witnessed increased gold values. Silver followed suit, extending its rally for a third consecutive session, climbing ₹300 to reach ₹90,800 per kilogram. The market's closure on Wednesday, Christmas Day, contributed to the concentrated price movements observed on Thursday. The increase in the price of 99.5% purity gold, reaching ₹78,450 per 10 grams, further underscored the overall upward trend in precious metal values.
Several factors contributed to this price surge. Traders cited firm trends in overseas markets as a primary driver, suggesting a global appetite for precious metals. The slightly weaker US dollar also played a role, making gold, priced in dollars, more attractive to international buyers. However, the upward momentum was somewhat tempered by the US Federal Reserve's hawkish stance, signaling a less aggressive approach to rate cuts. This cautious outlook, communicated by Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities, suggests that investors remain hesitant about making significant commitments despite the current price increases. This hesitation is also evident in the relatively thin trading volumes observed throughout the holiday-shortened week.
Futures trading on the Multi Commodity Exchange (MCX) reflected the overall trend. Gold contracts for February delivery increased by ₹442 (0.58%), reaching ₹76,712 per 10 grams. Similarly, silver contracts for March delivery saw a positive movement, rising ₹343 (0.38%) to ₹89,669 per 10 grams. The thin trade volumes, as noted by Trivedi, suggest a degree of market uncertainty and a reluctance among traders to make large-scale investments amidst the ongoing geopolitical tensions and economic uncertainties. The global gold market also experienced a rise, with Comex gold futures climbing USD 9.10 per ounce (0.35%) to reach USD 2,644.60 per ounce. This increase is partly attributed to safe-haven buying, driven by escalating tensions surrounding the ongoing Russia-Ukraine war. The increased demand for gold as a safe haven asset reflects investor concerns about global stability and the potential for further economic turmoil.
Looking ahead, market participants are awaiting the release of US macroeconomic data, specifically the weekly unemployment claims data. This data is expected to provide further insights into the direction of bullion prices. The release of this data will be crucial in determining whether the current upward trend will continue or if a correction is likely. Further uncertainty stems from the potential policies of a second Trump administration, adding another layer of complexity to the market outlook. The uncertainty surrounding potential policy shifts contributes to the overall cautious sentiment among investors, reinforcing the thin trading volumes observed throughout the week. The interplay between global geopolitical events, economic indicators, and potential policy changes will continue to shape the trajectory of gold and silver prices in the coming weeks and months. The market’s reaction to the upcoming economic data and any shifts in political landscape will undoubtedly impact trading activity and price fluctuations.
In summary, the increase in gold and silver prices in India reflects a broader global trend influenced by a variety of factors, including a weaker US dollar, geopolitical uncertainties, and cautious investor sentiment in the face of potential policy changes. While the current upward trend is apparent, the market remains sensitive to upcoming economic data and the potential for shifts in the global political landscape. The coming weeks will be crucial in determining the long-term trajectory of precious metal prices in both domestic and international markets. The interplay of global factors will continue to shape the dynamics of this important sector.