Precious metal prices surge over soft US consumer spending data

NEW DELHI — Gold prices surged moderately, while silver surged sharply on Wednesday, buoyed by hopes of a more accommodative Federal Reserve amid soft US consumer spending data.

MCX gold April futures climbed 0.71 per cent to INR 1,57,909 per 10 grams on an intra-day basis. Meanwhile, MCX silver March futures gained 2.67 per cent to INR 2,59,300 per kg.

The dollar index eased to 96.59 on Wednesday from 96.80 in the previous session, making greenback-backed bullion slightly cheaper for overseas buyers. The weakness in the dollar also contributed to the rally in precious metals.

In the international commodity markets, gold and silver prices inched up as US Treasury bond yields declined following weak December retail sales data.

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Analysts said that December retail sales fell short of expectations, signalling a slowdown in consumer spending and igniting concerns about slowing growth.

Markets are currently pricing in at least three rate cuts this year, up from two earlier this week -- a major tailwind for bullion due to expectations of a more relaxed monetary policy. 

COMEX Gold traded within the $4,900–$5,100 band after correcting sharply from highs above $5,500–$5,600.

The broader uptrend of COMEX Gold remains intact, with the recent pullback appearing as healthy profit booking rather than structural damage, market participants said.

Industrial demand and supply constraints continue to support the long-term constructive view of silver despite elevated volatility, they said, adding that the $65–$70 zone remains a strong structural support band for COMEX Silver.

"Gold has support at INR 1,55,500 and INR 1,54,000 zones, while resistance at INR 1,57,700 and INR 1,59,000. Silver has support at INR 2,44,000 and INR 2,48,800 levels while resistance at INR 2,60,000," an analyst said.