Gold and silver prices surged last week, touching lifetime highs, as investors monitored developments around the US government funding bill, labour market data, and the Federal Reserve’s policy stance. Analysts expect continued volatility in bullion markets in the coming week.
Gold prices rose 3.5–4 per cent last week, buoyed by a weaker US dollar and concerns over a partial US government shutdown, which has delayed key macroeconomic data releases. On the Multi Commodity Exchange (MCX), gold futures for December delivery surged Rs 3,222, or 2.8 per cent, closing at Rs 1,18,113 per 10 grams on Friday, just shy of a lifetime peak of Rs 1,18,444 reached earlier in the week.
“Market participants are also pricing in the possibility of a potential Fed rate cut later this month,” said Pranav Mer, Vice President at JM Financial Services Ltd.
Drivers of the rally
Rising ETF holdings, renewed central bank demand, and stronger speculative positions are fueling gold’s breakout. Analyst Jyoti Prakash noted that gold prices have disconnected from marginal production costs, with producer margins at their highest in 55 years.
Domestic demand in India has also surged, with gold and silver imports nearly doubling in September compared to August, ahead of the festive and wedding season.
Silver futures mirrored gold’s gains, with MCX December delivery rising Rs 3,855, or 2.72 per cent, to close at Rs 1,45,744 per kilogram, hitting a record high of Rs 1,46,975 per kg. Comex silver futures for December delivery rose 3.44 per cent to $47.96 per ounce, touching $48.32, a lifetime high.
“Silver continues to outperform gold, driven by strong industrial demand from solar panels, EVs, and electronics, coupled with supply deficits,” said Pankaj Singh, Founder of SmartWealth.ai.
Global factors
Globally, gold futures for December delivery rose 1.05 per cent to $3,908.90 per ounce, after touching a record $3,923.30. Analyst Riya Singh highlighted that gold’s year-to-date gains exceed 46 per cent, the largest annual rise since 1979, supported by safe-haven demand amid US political and monetary uncertainty, inflows into gold-backed ETFs, and geopolitical tensions in Europe.
Analysts expect gold and silver to remain volatile, with intermittent profit-booking, but a continued upside bias is likely. Pranav Mer projected near-term silver levels between Rs 1,50,000 and Rs 1,70,000 per kg, while gold will continue to benefit from a weaker US dollar and safe-haven buying.