Gold and silver prices have experienced a significant surge, with both metals reaching new highs amid global economic uncertainty and market volatility.

Precious Metals on the Rise

Gold has shown remarkable strength, rising for eight consecutive weeks. Meanwhile, silver has broken past its 2011 highs, surpassing $50.00 per ounce in international markets and reaching ₹1,53,400.00 per kg in India.

Dollar Index Volatility

The dollar index has exhibited high volatility, moving from 96.22 in late September to 99.56 by October 9, before easing to 98.92. This fluctuation is largely attributed to ongoing US-China tariff tensions and the current US government shutdown, both of which are impacting currency markets.

Rupee Outlook

The Indian rupee is expected to trade between ₹87.50 and ₹88.50, with the Reserve Bank of India's intervention likely to keep it stable around ₹87.00-88.00 per dollar.

Silver Supply Constraints

Silver is facing supply constraints, with production running at a deficit for four to five years. London Metal Exchange inventories have fallen to nearly half of their year-start levels, further tightening the market.

Technical Levels for Gold and Silver

For gold, key support levels are identified at ₹1,21,200.00 and ₹1,20,000.00, with resistance at ₹1,24,600.00 and ₹1,25,400.00. Silver shows support at ₹1,50,000.00 and ₹1,48,000.00, with resistance at ₹1,56,000.00 and ₹1,58,000.00.

Factors Supporting Precious Metals

Both gold and silver are benefiting from several supportive factors:

• Safe-haven demand in uncertain economic times
• Increased inflows into Exchange-Traded Funds (ETFs)
• Active buying by central banks

As global economic uncertainties persist and geopolitical tensions remain high, the precious metals market continues to attract investor interest, with both gold and silver maintaining their upward momentum.

Gold and silver prices opened significantly higher on Monday, driven by renewed safe-haven demand amidst fresh U.S.-China trade tensions and global economic uncertainties. The precious metals market witnessed a substantial surge, with gold reaching a new international record and silver hovering near historic levels.

Price Movements

Gold futures on the Multi Commodity Exchange (MCX) were trading at Rs 1,23,286.00 per 10 grams, while silver was priced at Rs 1,51,050.00 per kilogram. The yellow metal reached a fresh international record above $4,060.00 an ounce after its eighth consecutive weekly advance.

Factors Driving the Surge

Several key factors contributed to the significant price increase in precious metals:

1. U.S.-China Trade Tensions: Renewed trade frictions between the world's two largest economies have heightened market uncertainties.
2. Economic Uncertainties: Global economic instability has increased the appeal of gold and silver as safe-haven assets.
3. Interest Rate Expectations: Anticipation of further U.S. interest rate cuts has bolstered the attractiveness of non-yielding bullion.
4. U.S. Government Shutdown: The ongoing shutdown has delayed key economic data releases, adding to market volatility.
5. Silver Short Squeeze: A historic short squeeze in London has pushed silver prices near record levels.

Gold's Performance

Gold has experienced a remarkable performance:

• Price Increase: 55% jump year-to-date
• Supporting Factors:
  • Geopolitical risks
  • Central bank purchases
  • ETF inflows
  • Tariff-related concerns

Market Analysis

Analysts note that the sustained momentum in precious metals is backed by:

1. Government shutdown concerns
2. Growing 'de-dollarization' theme

However, they caution that profit-taking and emerging geopolitical clarity could test the strength of the current rally.

Bank of America's Bullish Forecast

Bank of America has significantly raised its price forecasts for precious metals:

• Gold: 2026 target set at $5,000.00 per ounce, with an average of $4,400.00
• Silver: 2026 target at $65.00 per ounce, averaging $56.25

The bank cited supportive factors including fiscal deficits, rising debt, and policy intentions to reduce current account deficits. This makes Bank of America the first major bank to forecast gold at $5,000.00/oz for 2026.

Silver Market Dynamics

Despite expecting an 11% decline in silver demand next year, Bank of America anticipates firm prices due to continued supply shortfalls. The Silver Institute indicates that the metal is heading for its fifth consecutive year of structural market deficit. However, the bank noted potential near-term volatility in silver due to market dislocations from metal movements between London and New York.

Outlook

While the precious metals market shows strong performance, investors should remain cautious. The potential for profit-taking and changes in the geopolitical landscape could impact the ongoing rally. It's essential for investors to stay informed about global economic developments and market trends when considering investments in gold and silver.