Gold and Silver Prices Rise for Third Consecutive Session on Fed Rate Cut Hopes

Gold prices extended their gains for the third consecutive session on Friday, with December gold futures on the Multi Commodity Exchange (MCX) appreciating by Rs 520, or 0.43 percent, to Rs 1,21,133 per 10 grams. Simultaneously, silver futures for December delivery also showed strong traction, rallying by Rs 1,598, or 1.09 percent, to Rs 1,48,667 per kilogram.

These movements are largely tracking firm global cues. Soft U.S. labor data, indicating a significant tripling of private sector job cuts in October, has bolstered expectations that the U.S. Federal Reserve may implement an interest rate cut soon. "Gold and silver prices are attempting to establish a base before the next rise, following confirmation of supporting factors, including massive layoffs and the US government shutdown," stated Renisha Chainani, Head - Research at Augmont.

On the global front, Comex gold futures rose, and silver also increased. Jigar Trivedi, Senior Research Analyst at Reliance Securities, noted that the U.S. private sector employment data, showing the largest increase in job cuts over two decades, has tempered optimism and kept uncertainty over the U.S. labor market elevated.

The dollar index, which measures the greenback's strength, saw a slight rise, which somewhat capped gains in bullion prices by making them less expensive for foreign buyers. However, with the U.S. government shutdown continuing, investors are closely watching private economic data and upcoming speeches from Federal Reserve officials for monetary policy direction.

Impact: Rising gold and silver prices can lead to increased costs for consumers in India, particularly for jewelry purchases and other uses of these metals. It may also contribute to inflationary pressures. Rating: 6/10.

Difficult Terms: Federal Reserve: The central banking system of the United States, responsible for monetary policy and financial stability. Multi Commodity Exchange (MCX): An Indian commodity derivatives exchange for trading in commodity futures. Futures: A financial contract obligating the buyer to purchase, or the seller to sell, an asset at a predetermined future date and price. Bullion: Gold or silver in bulk form, typically bars or coins, valued by weight. Dollar Index: A measure of the U.S. dollar's value relative to a basket of six major world currencies. Monetary Policy: Actions undertaken by a central bank, such as adjusting interest rates, to manage the money supply and stimulate or restrain economic activity.