Whalesbook
Gold and Silver Set to Retain Strength Amidst Fed Watch
Gold and silver prices are anticipated to hold their ground in the upcoming week, as market participants await crucial insights from the US Federal Reserve's Federal Open Market Committee (FOMC) meeting minutes. These minutes are expected to provide significant direction regarding the future trajectory of monetary policy.
Key Drivers for Bullion Prices
Analysts suggest that despite a likely subdued trading activity due to a light economic calendar, including pending home sales data, the FOMC meeting minutes from the December session will be a primary catalyst for bullion prices. This focus underscores the market's sensitivity to central bank actions and their impact on precious metals.
2026 Outlook: Steady Growth Expected
Looking ahead to 2026, both gold and silver are projected to continue their upward trajectory. Key drivers identified include the prospect of global interest rate cuts, the enduring appeal of precious metals as safe-haven assets during times of economic uncertainty, and sustained industrial demand. However, experts caution that the pace of gains in 2026 might moderate compared to the exceptional performance seen in 2025.
Price Projections and Market Performance
On the Multi Commodity Exchange (MCX), gold futures saw a significant gain of ₹5,677, or 4.23 percent, during the past week, reaching a lifetime high of ₹1,40,465 per 10 grams. Pranav Mer, Vice President at JM Financial Services Ltd, forecasts gold prices could reach $5,000-5,200 internationally and ₹1,50,000-1,55,000 on the MCX in 2026. He noted that factors like monetary policy easing, de-dollarisation trends, and global trade tensions will continue to influence prices.
Internationally, gold prices climbed by $165.4, or 3.77 percent, in the past week, touching a lifetime high of $4,584 per ounce on the Comex. While central bank purchases have slightly slowed compared to recent years, buying remains steady, supported by diversification strategies and currency concerns. Prathamesh Mallya, DVP - Research at Angel One, highlights that easing US Federal Reserve rates and anticipated further cuts make gold and silver increasingly attractive. He also cited safe-haven flows driven by US President Donald Trump's tariff policies and the Russia-Ukraine conflict as contributing factors.
Mallya anticipates gold prices could ascend to ₹1,60,000 per 10 grams on commodity exchanges in the first half of 2026.
Silver's Spectacular Rally
Silver futures also experienced a remarkable week, driven by strong industrial and investment demand. On the MCX, silver futures surged by ₹31,348, or 15.04 percent, in a holiday-shortened week, reaching a new record of ₹2,42,000 per kg. In overseas trade on Comex, silver prices gained $9.71, or 14.4 percent, hitting a lifetime high of $79.70 per ounce.
Pranav Mer pointed to strong industrial demand from emerging sectors, silver's relatively cheaper pricing compared to gold, and a sharp rally in industrial metals post-Trump's April 2025 tariff announcement as supportive factors. Analysts project silver prices could rise to ₹2,75,000 per kilogram on the MCX and $80-85 per ounce globally, citing global supply constraints.
Geopolitical and Supply Chain Factors
China's announcement of export restrictions on certain goods from January 1, 2026, impacting its significant role as a consumer of silver and producer of solar panels, electronics, and EVs, is expected to disrupt global supply chains. These restrictions, potentially lasting through 2027, could further influence silver availability and pricing.
Impact
This news is highly relevant for investors in commodity markets, particularly those dealing with gold and silver. It affects hedging strategies against inflation and currency fluctuations. The outlook for 2026 suggests continued positive sentiment, though potential moderation in growth should be noted. The interplay of monetary policy, geopolitical tensions, and industrial demand will remain critical. Impact Rating: 7/10
Difficult Terms Explained
- FOMC: Federal Open Market Committee, the monetary policymaking body of the US Federal Reserve.
- Bullion: Gold or silver in bulk form, typically uncoined and unminted.
- MCX: Multi Commodity Exchange of India Limited, a commodity derivatives exchange.
- Comex: Commodity Exchange Center, a division of the New York Mercantile Exchange, where precious metals futures are traded.
- De-dollarisation: The process of reducing the dominance of the US dollar in international trade and finance.
- Safe-haven asset: An investment that is expected to retain or increase its value during times of market turbulence or economic downturn.
- Tariff: A tax or duty to be paid on particular imports or exports.