Gold, silver likely to extend gains as inflation, West Asia risks loom

Bullion prices are expected to remain firm next week as investors track inflation data from major economies

Gold and silver prices are expected to extend their gains next week, as inflation data from major economies and developments on efforts to end hostilities in West Asia are likely to set the tone for bullion, analysts said.

Investors will track inflation numbers from the US, Germany, Japan and India, while upcoming Chinese economic data will also be crucial for industrial metals, they added.

"Gold and silver momentum looks positive and are expected to trade with a positive bias and move up towards ₹1.57 lakh per 10 grams and ₹2.80 lakh per kg in the short term," Pranav Mer, Senior Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd, said.

 

On the domestic front, gold futures for October delivery climbed ₹8,444, or nearly 6 per cent, during the week to close at ₹1.51 lakh per 10 grams.

Silver futures for the September contract surged ₹14,268, or nearly 7 per cent, to settle at ₹2.31 lakh per kilogram on the Multi Commodity Exchange.

"Gold witnessed a strong rally this week, gaining nearly 6 per cent, as weaker-than-expected US labour market data revived expectations of a more accommodative monetary policy from the Federal Reserve," said Jateen Trivedi, VP Research Analyst, Commodity and Currency, LKP Securities.

The weaker dollar also encouraged fresh buying in precious metals, allowing gold to post one of its strongest weekly gains in recent months, he added.

In the international markets, gold futures for the December delivery jumped $292.7, or 7 per cent, to finish the week at $4,399.7 per ounce, while silver for the September contract soared $5.71, or nearly 10 per cent, to $63.50 per ounce.

Mer said gold broke out of its consolidation range and ended the week with gains of more than 6 per cent, supported by a reversal in the US dollar and crude prices remaining in corrective mode, with oil falling close to $75 per barrel.

According to Trivedi, developments involving the US and Iran will also remain in focus, with any unexpected diplomatic or military announcement potentially triggering sharp moves in bullion when markets reopen on Monday.

"Overall, volatility is expected to remain elevated in the coming week. The combination of US economic data, Federal Reserve expectations, and ongoing geopolitical uncertainty is likely to keep gold highly reactive," he said.