Gold Prices Surge Amid Market Shifts and Economic Data
Gold's Weekly Performance
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New Delhi, Nov 7: Gold experienced its most significant weekly increase since August, climbing nearly 4.5% as crude oil faced its largest weekly drop since April 2020, fueled by expectations of policy changes following the US midterm elections.
Fears regarding the global artificial intelligence landscape prompted a notable shift of investments from equity markets to commodities, while a shifting perspective from the Federal Reserve also bolstered optimism for precious metals.
On Friday, December MCX gold futures fell by 1.20%, whereas December MCX silver futures saw a slight rise of 0.10%. Gold futures were priced at Rs 1,42,364, while silver futures reached Rs 1,84,977 per kg.
WTI crude prices dropped from over $4-5 a barrel to approximately $..., while Brent crude eased into the $... range, with both benchmarks recording weekly declines exceeding 12%.
Despite the 4.5% gains, prices pulled back from their intraday peaks after a robust employment report strengthened the dollar and Treasury yields.
The cost of 10 grams of 24-carat gold was Rs 1,41,452 on Friday, up from Rs 1,40,054 at the previous week's close, according to the India Bullion and Jewellers Association (IBJA).
Although the Federal Reserve maintained interest rates during its October meeting, comments from two officials advocating for gradual rate increases to combat ongoing inflation heightened expectations for further monetary tightening.
The US employment report released on Friday supported this hawkish sentiment, showing nonfarm payrolls increased by 165,000, surpassing market predictions of 65,000, while the unemployment rate dipped to 4.1% from 4.2%.
This stronger-than-anticipated labor market data raised the implied likelihood of a rate hike in December to about 81%.
US Treasury yields rose in response, with the 10-year yield nearing 4.88%, while the dollar gained strength, exerting downward pressure on precious metals as the week concluded.
Lower international gold prices also spurred physical purchases in India ahead of Diwali, according to analysts. However, the prospect of further Fed tightening and increased borrowing costs continued to pose challenges to the sustainability of gold's recovery.
Immediate resistance for MCX Gold is identified at Rs 1,43,000–Rs 1,43,700, while support levels are seen at Rs 1,41,000–Rs 1,40,000. For MCX Silver, immediate resistance is at Rs 1,86,000–Rs 1,88,000, with support levels ranging from Rs 1,78,000–Rs 1,80,000, analysts noted.