Gold holds ground as traders track US inflation data; silver braces for volatility: Analysts
New Delhi: Gold prices are likely to trade firm next week as traders await key economic data, including US inflation numbers, for fresh cues on interest rate outlook, while silver may remain volatile amid shifting risk sentiment and speculative activity, analysts said. Traders will look for cues from US GDP, PMI, non-farm payroll and inflation data. Also, inflation readings from China, Germany, and India will also be keenly watched. Speeches from US Federal Reserve officials will be closely tracked as well for indications on the timing of potential rate cuts and their impact on bullion prices, they added.
"Gold consolidation and recovery suggest that bias still remains positive. However, in case of silver, we remain cautious of volatility and further corrections," Pranav Mer, Vice President, EBG - Commodity & Currency Research, JM Financial Services, said. During the past week, gold futures climbed Rs 7,698, or 5.2 per cent, while silver slumped Rs 15,760 or nearly 6 per cent on the Multi Commodity Exchange. The commodities market remained open on Sunday due to the presentation of the Union Budget by Finance Minister Nirmala Sitharaman.
"Gold and silver endured an extremely volatile week as a sharp dollar rebound, shifting Fed expectations and aggressive position unwinding triggered one of the steepest corrections in decades," Manav Modi, Analyst - Commodities, Motilal Oswal Financial Services Ltd (MOFSL), said.
He said easing tensions between Washington and Tehran, progress in tariff negotiations by President Donald Trump and reduced risk of a US government shutdown lowered safe-haven premiums, while Kevin Warsh being nominated as the next Fed Chair also prompted traders to scale back aggresive rate-cut expectations.
"The unwind was severe: gold recorded its sharpest decline in nearly four decades, while silver languished, amplified by heavy call option positioning, margin calls and speculative driven liquidation," Modi noted.
