Gold and Silver Prices Expected to Consolidate Amidst US Inflation Data and Tariff Uncertainty

Gold prices are anticipated to experience a corrective phase in the upcoming week, with market participants awaiting key US inflation data. Additional factors influencing this outlook include lingering uncertainties surrounding trade tariffs and the release of significant economic numbers from China. Analysts suggest that commentary from US Federal Reserve officials will be crucial for determining the near-term trajectory of bullion prices. Currently, gold is trading within a range, capped by a stronger dollar and weaker physical demand as retail buyers hold back, expecting further price dips. However, the downside is supported by uncertainties regarding the US economic outlook and the ongoing federal government shutdown, which delays crucial macroeconomic data releases. The US Supreme Court's decision on former President Trump's trade tariffs is also expected to increase volatility in financial markets, particularly for gold. On MCX, gold futures saw a marginal decline last week and are trading within a broad range, supported by factors like a weak US labor market, safe-haven demand, and hopes for potential US interest rate cuts.

Silver prices are also showing range-bound movement, mirroring gold. A significant development is the US administration's decision to add silver, along with copper and uranium, to its official list of critical minerals. This inclusion could lead to new tariffs and trade restrictions, potentially disrupting global supply chains and increasing price volatility for silver, which is heavily relied upon for industrial uses. Analysts see silver's momentum as consolidative to corrective, with support levels identified. Resilient industrial demand, geopolitical risks, and a weak US dollar are expected to keep silver prices relatively supported.

Impact: These commodity price movements can impact Indian investors who hold gold and silver as assets, affecting their portfolio values. Changes in silver prices can also influence Indian manufacturing sectors reliant on imported silver for electronics, solar panels, and medical devices. Fluctuations in gold and silver prices may also indirectly influence inflation sentiment in India.

Difficult Terms: Corrective phase: A period where an asset's price, after a significant rise or fall, moves sideways or declines/rises moderately to correct previous trends. Trade tariffs: Taxes imposed by a government on imported goods, often used to protect domestic industries or as a political tool. Monetary policy: Actions undertaken by a central bank to manipulate the money supply and credit conditions to stimulate or restrain economic activity. Bullion prices: Prices for precious metals like gold and silver in their raw or minted forms. Consolidation: A period in financial markets where an asset's price moves within a narrow, sideways range, indicating a balance between buyers and sellers. Federal government shutdown: A situation where the US federal government ceases to operate due to a failure to pass appropriation bills. Macroeconomic data: Statistical information about the overall performance of an economy, such as GDP, inflation rates, unemployment figures, and interest rates. Safe-haven demand: Increased buying of assets perceived as safe during times of economic uncertainty or market turmoil, such as gold. Interest rate cuts: A reduction in the benchmark interest rate by a central bank, making borrowing cheaper and aiming to stimulate economic growth. Exchange-Traded Funds (ETFs): Investment funds traded on stock exchanges, which hold assets like commodities, bonds, or stocks. Range-bound: When an asset's price trades between a defined upper and lower limit over a period, without breaking out significantly in either direction. Critical minerals: Minerals and metals deemed essential for a nation's economic or national security, often with supply chain vulnerabilities.