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The recent surge in gold and silver prices reflects a complex interplay of factors, ranging from expectations regarding US Federal Reserve policy to global trade dynamics. Gold in the national capital experienced a rise of Rs 400, reaching Rs 1,01,420 per 10 grams, driven by robust buying activity from stockists and bolstered by positive trends in the global market. Similarly, silver prices saw a significant increase of Rs 1,500, climbing to Rs 1,13,500 per kg. These upward movements are indicative of the current market sentiment, which is heavily influenced by speculation about future monetary policy decisions and the overall health of the global economy. A key driver behind the price increases is the growing anticipation that the US Federal Reserve will soon resume cutting interest rates, potentially as early as the September meeting. This expectation has led traders to increase their bets on precious metals, viewing them as a hedge against potential economic uncertainty and inflation. The prospect of lower interest rates tends to weaken the US dollar, making dollar-denominated assets like gold more attractive to international investors. Moreover, the slowing labour market in the US has further fueled expectations of rate cuts, providing additional room for the Federal Reserve to ease monetary policy. The recent US Consumer Price Index (CPI) report, which allayed concerns about tariff-driven inflation, has also contributed to the positive sentiment surrounding gold and silver. The CPI report indicated that inflation pressures are not as severe as previously feared, which reduces the urgency for the Federal Reserve to maintain its current hawkish stance. In global markets, spot gold experienced a marginal increase, trading at $3,356.96 per ounce in New York. However, analysts caution that optimism surrounding trade relations and upcoming talks between key world leaders could temper further gains. The extension of the tariff truce between Washington and Beijing by 90 days, along with planned discussions between the US, European, Ukrainian, and Russian leaders, suggests a potential easing of geopolitical tensions, which could reduce the safe-haven demand for gold. Kaynat Chainwala, AVP of Commodity Research at Kotak Securities, noted that gold's gains extend ahead of the US Producer Price Index (PPI) and jobless claims data, but also highlighted the potential for trade optimism to limit further upside. Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, emphasized the role of dollar weakness and ongoing tariffs in supporting gold prices. He added that gold remains positive as long as the $3,280 per ounce level is maintained. Despite the positive momentum in gold, spot silver eased slightly, declining 0.41% to $38.35 per ounce internationally. This divergence in performance between gold and silver could be attributed to differences in their industrial demand and investor sentiment. While gold is primarily seen as a safe-haven asset and a store of value, silver has significant industrial applications, making its price more sensitive to economic growth and manufacturing activity. The overall outlook for gold and silver remains cautiously optimistic, with potential for further gains if the Federal Reserve proceeds with interest rate cuts and geopolitical tensions continue to simmer. However, investors should also be mindful of potential headwinds, such as improved trade relations and stronger-than-expected economic data, which could dampen demand for precious metals.
Source: Gold rate today: Yellow metal jumps Rs 400 to Rs 1,01,420; silver surges Rs 1,500 on fresh buying