Mumbai: Gold prices saw a strong rise on Tuesday as expectations of a US Federal Reserve rate cut and festive season demand boosted sentiment.
In early trade on the Multi Commodity Exchange (MCX), gold futures for December delivery were up 1 per cent at Rs 1,25,106 per 10 grams around 9:47 am.
Silver prices also moved higher. MCX Silver December contracts were trading 1.34 per cent higher at Rs 1,56,551 per kg during the same time.
“In INR gold has support at Rs1,23,150-1,22,580 while resistance at Rs1,24,650-1,25,200,” analysts said.
“Silver has support at Rs1,53,650-1,52,800 while resistance at Rs1,56,140, 1,57,000,” they added.
The sharp move in the domestic market followed a strong rally in global prices.
International gold rates jumped nearly 2 per cent in the previous session as growing hopes of an interest rate cut by the US Fed encouraged investors to shift towards safe-haven assets like gold.
Gold generally performs well in a low-interest-rate environment because it does not generate interest like bonds or deposits.
When interest rates fall and returns from other investments decline, investors prefer gold as a more attractive option.
In India, ongoing wedding season demand has also contributed to the strength in prices, as gold buying traditionally increases during this period.
Investors are now waiting for key economic data from the United States, including retail sales, jobless claims and producer price inflation numbers.
The release of these figures was delayed due to the recent US government shutdown and is expected to influence the Fed’s next policy decision.
For now, sentiment remains positive, and analysts believe price volatility may continue depending on upcoming global economic indicators, experts said.
“Precious metals found support from the New York Fed Governor’s dovish remarks on a possible December rate cut, with market expectations for a 25 bps has surged to around 81 per cent, up sharply from about 40 per cent a week earlier,” analysts said.
(IANS)
