Gold prices in India are likely to stay volatile on Friday, December 20, 2024, amidst the US Fed's hawkish tone and 2-year high dollar index. Yesterday, gold prices witnessed a sharp decline after the Fed signaled lesser rate cuts in 2025. Prices had plunged by at least Rs 7,100 in a single day in 24K of 100 grams on December 19. Here's what will drive yellow metal and silver prices ahead.
Gold Prices In India:
24K gold prices stood at Rs 77,130 per 10 grams and at Rs 7,71,300 for 100 grams. The prices were down by Rs 710 and Rs 7,100 on December 19.
Further, gold prices were down to Rs 70,700 and Rs 57,850 for 22K and 18K of 10 grams, respectively.
In cities like Chennai, Hyderabad, Kerala, Kolkata, Pune, Bangalore, and Mumbai, 24K gold prices were Rs 77,130 per 10 grams. However, gold prices were higher in Delhi, at Rs 77,280, and in Ahmedabad and Vadodara, at Rs 77,180.
Silver Prices In India:
The price of silver in India is currently Rs 91.50 per gram and Rs 91,500 per kilogram. On December 19, the price of 1 kg of silver dipped by Rs 1,000. Silver continues to remain expensive in Chennai, Hyderabad, and Kerala, at Rs 99,000 per 1kg.
MCX Gold, Silver Prices:
MCX gold with February 2025 expiry, closed at Rs 75,694 per 10 grams, after touching Rs 76,450 per 10 grams during December 19th session.
Meanwhile, MCX silver with March 2025 expiry also finished at Rs 87,230 per 1kg, after touching the day's high of Rs 89,500 per 1kg.
Spot Gold Prices:
As per Trading Economics, spot gold rose above $2,610 per ounce on Thursday, likely due to a technical recovery after losing more than 2% in the previous session. The decline followed the Federal Reserve's hawkish signal of fewer rate cuts next year, with the dot plot projections showing only two rate cuts in 2025, supported by strong GDP growth and persistent inflation.
On the other hand, the dollar index stood at 108, near its highest level since November 2022.
What Will Drive Gold Prices?
Kaynat Chainwala, AVP-Commodity Research, Kotak Securities highlighted that the Federal Reserve's hawkish tone, following a widely anticipated 25 basis point rate cut, prompted the US 10-year yield to rise to 4.45%, and the US Dollar Index to hit a two-year high of 108.3.
Chainwala added Fed Chair Jerome Powell remarked that the policy rate has been reduced by a full percentage point from its peak, making the overall policy stance significantly less restrictive. This shift allows for a more cautious approach to future rate adjustments. The Fed's quarterly forecasts show officials expect the benchmark rate to reach a range of 3.75% to 4% by the end of 2025, suggesting two quarter-percentage-point cuts, down from the 100 basis points previously projected in September. Additionally, the median 2025 PCE inflation forecast increased to 2.5% from 2.1%.
Also, Trading Economics added that the Fed's outlook has pressured gold demand, as limited monetary easing reduces the appeal of non-yielding assets like bullion. Traders will now closely watch upcoming US GDP and PCE inflation data this week, which could further shape monetary policy expectations. Gold has surged over 27% this year, heading for its largest annual gain since 2010, driven by US monetary easing, strong safe-haven demand, and robust central bank purchases.
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