What is the story about?
Gold prices edged higher on Tuesday (December 16), supported by a weaker US dollar and expectations that the Federal Reserve could begin cutting interest rates earlier than anticipated, while silver remained near all-time levels, underpinned by robust industrial demand and tightening supplies.
Spot gold rose 0.1% to $4,311.64 per ounce in early Asian trade, extending a year-to-date rally of over 64% that has seen the metal hit multiple record highs.
US gold futures were largely flat at $4,333.20 an ounce.
In India, 24-carat gold was priced at ₹13,386 per gram, while 22-carat gold stood at ₹12,270 per gram.
Silver prices eased marginally in global markets, with spot silver down 1.2% at $63.11 an ounce, but the metal continued to hover close to Friday’s (December 12's) all-time high of $64.65.
Domestic silver prices remained elevated at ₹199 per gram, or ₹1.99 lakh per kilogram.
Dollar, data in focus
The US dollar hovered near a two-month low, lending support to dollar-denominated bullion. Market participants remained cautious ahead of key US employment data, which could influence expectations for the Fed’s policy trajectory into 2026.
“The dollar’s subdued performance is helping keep gold prices on the front foot. Markets believe the Fed could be underestimating the number of rate cuts next year,” said Tim Waterer, Chief Market Analyst at KCM Trade.
According to CME’s FedWatch tool, traders are pricing in a 76% probability of a 25-basis-point rate cut in January, with some expectations of two cuts.
Non-yielding assets such as gold typically benefit in lower interest rate environments.
Fed Governor Stephen Miran recently noted that current above-target inflation does not fully reflect underlying supply-demand dynamics, suggesting price pressures may be closer to the central bank’s 2% target.
Analysts said weaker labour market data could further strengthen the case for monetary easing, providing additional support to bullion.
ANZ analysts flagged upside risks for gold, suggesting prices could test $5,000 an ounce next year if rate cuts materialise faster than expected.
Silver’s dual role
While gold continues to act as a traditional hedge against uncertainty, silver has emerged as a hybrid asset, reflecting both safe-haven and industrial demand dynamics.
The metal has rallied more than 120% this year, driven by firm demand from manufacturing, clean energy and investment flows, alongside constrained inventories.
“Silver is behaving like a leveraged play on global growth and the energy transition,” said Rajkumar Subramanian, Head – Product & Family Office at PL Wealth. “Its rising use in solar manufacturing, electric vehicles and electronics is structurally boosting demand, especially in India.”
Market participants noted that silver’s higher volatility compared to gold also offers greater upside during commodity upcycles, making it an increasingly important portfolio diversifier.
Policy backdrop and domestic factors
The finance ministry recently attributed the surge in gold and silver prices to heightened geopolitical tensions, uncertainty over global growth and strong safe-haven demand, including sustained purchases by central banks.
Domestic prices, it said, are largely influenced by international prices, the rupee-dollar exchange rate and applicable taxes.
India imported gold worth $26.51 billion and silver worth $3.21 billion up to September this fiscal, while the Reserve Bank of India increased its gold reserves to 879.58 metric tonnes as of March 31, 2025.
Near-term outlook
Analysts expect volatility to persist in the near term as investors track US macro data and central bank signals.
Rahul Kalantri, VP Commodities at Mehta Equities, said gold found support amid weak US manufacturing data and a softer dollar, while silver outperformed on expectations of strong industrial demand.
He pegged near-term support for gold at $4,275–$4,245 an ounce and resistance at $4,340–$4,375 an ounce, while silver faces resistance around $64–$64.55 an ounce.
Overall, the outlook for bullion remains constructive, with gold supported by macroeconomic uncertainty and potential rate cuts, and silver benefiting from its growing industrial relevance alongside its role as a precious metal.
-With Reuters inputs
Spot gold rose 0.1% to $4,311.64 per ounce in early Asian trade, extending a year-to-date rally of over 64% that has seen the metal hit multiple record highs.
US gold futures were largely flat at $4,333.20 an ounce.
In India, 24-carat gold was priced at ₹13,386 per gram, while 22-carat gold stood at ₹12,270 per gram.
Silver prices eased marginally in global markets, with spot silver down 1.2% at $63.11 an ounce, but the metal continued to hover close to Friday’s (December 12's) all-time high of $64.65.
Domestic silver prices remained elevated at ₹199 per gram, or ₹1.99 lakh per kilogram.
Dollar, data in focus
The US dollar hovered near a two-month low, lending support to dollar-denominated bullion. Market participants remained cautious ahead of key US employment data, which could influence expectations for the Fed’s policy trajectory into 2026.
“The dollar’s subdued performance is helping keep gold prices on the front foot. Markets believe the Fed could be underestimating the number of rate cuts next year,” said Tim Waterer, Chief Market Analyst at KCM Trade.
According to CME’s FedWatch tool, traders are pricing in a 76% probability of a 25-basis-point rate cut in January, with some expectations of two cuts.
Non-yielding assets such as gold typically benefit in lower interest rate environments.
Fed Governor Stephen Miran recently noted that current above-target inflation does not fully reflect underlying supply-demand dynamics, suggesting price pressures may be closer to the central bank’s 2% target.
Analysts said weaker labour market data could further strengthen the case for monetary easing, providing additional support to bullion.
ANZ analysts flagged upside risks for gold, suggesting prices could test $5,000 an ounce next year if rate cuts materialise faster than expected.
Silver’s dual role
While gold continues to act as a traditional hedge against uncertainty, silver has emerged as a hybrid asset, reflecting both safe-haven and industrial demand dynamics.
The metal has rallied more than 120% this year, driven by firm demand from manufacturing, clean energy and investment flows, alongside constrained inventories.
“Silver is behaving like a leveraged play on global growth and the energy transition,” said Rajkumar Subramanian, Head – Product & Family Office at PL Wealth. “Its rising use in solar manufacturing, electric vehicles and electronics is structurally boosting demand, especially in India.”
Market participants noted that silver’s higher volatility compared to gold also offers greater upside during commodity upcycles, making it an increasingly important portfolio diversifier.
Policy backdrop and domestic factors
The finance ministry recently attributed the surge in gold and silver prices to heightened geopolitical tensions, uncertainty over global growth and strong safe-haven demand, including sustained purchases by central banks.
Domestic prices, it said, are largely influenced by international prices, the rupee-dollar exchange rate and applicable taxes.
India imported gold worth $26.51 billion and silver worth $3.21 billion up to September this fiscal, while the Reserve Bank of India increased its gold reserves to 879.58 metric tonnes as of March 31, 2025.
Near-term outlook
Analysts expect volatility to persist in the near term as investors track US macro data and central bank signals.
Rahul Kalantri, VP Commodities at Mehta Equities, said gold found support amid weak US manufacturing data and a softer dollar, while silver outperformed on expectations of strong industrial demand.
He pegged near-term support for gold at $4,275–$4,245 an ounce and resistance at $4,340–$4,375 an ounce, while silver faces resistance around $64–$64.55 an ounce.
Overall, the outlook for bullion remains constructive, with gold supported by macroeconomic uncertainty and potential rate cuts, and silver benefiting from its growing industrial relevance alongside its role as a precious metal.
-With Reuters inputs
