Gold prices rebound to $3730(~Rs 110,600) again and Silver touches new high of $43.94(~Rs 132,000), bolstered by strong central bank purchases, consistent ETF inflows, and safe-haven demand amid ongoing geopolitical tensions and worries about the economic effects of President Donald Trump’s tariffs.
For the first time since December, the Federal Reserve cut its benchmark rate by 25 basis points, as was generally expected, placing the overnight funds rate between 4.00% and 4.25%. In addition, concerns over a weakening US labor market prompted the US central bank to consider two additional rate cuts this year. As a result, on Wednesday, the non-yielding gold price surged above $3700 to reach a new all-time high.
Fed Chair Jerome Powell stated that risks to inflation are biased to the upside, which caused a momentary decline in US Treasury bond yields and the US dollar before they recovered sharply. Powell also told reporters that the central bank is assessing the outlook for interest rates meeting by meeting. This thus caused a significant intraday turnaround and put pressure on the non-yielding yellow metal.
The US central bank released revised economic projections in conjunction with the policy decision, estimating that the economy will expand by 1.6% this year, 1.8% in 2026, and 1.9% in 2027. A 3.1% pace of inflation this year, 2.6% next year, and 2.1% in 2027 are implied by the Fed’s core PCE projection, which does not include the more volatile food and energy components. The long-term forecast, however, stays around the 2% target.
Regarding the geopolitical front, Russia’s Defense Ministry stated that our soldiers are moving forward in the area of the special military operation in almost every direction. In a separate statement, German Chancellor Friedrich Merz cautioned that Russia has been pushing the envelope by infringing on EU and NATO airspace. The head of the European Commission, Ursula von der Leyen, also wants the European Union to accelerate the stoppage of Russian oil and gas imports.
The Israeli military is continuing its ruthless offensive that has sparked significant international condemnation, and it has increased the use of booby-trapped armored vehicles to destroy residential neighborhoods in Gaza City. In an effort to put pressure on Israel to stop the conflict in Gaza, which has already lasted for 23 months, the EU is thinking about putting taxes on Israel and penalizing government ministers who support extremism.
For any boost later in the North American session, traders now anticipate Thursday’s US data schedule, which includes the release of the regular Weekly Initial Jobless Claims and the Philadelphia Fed Manufacturing Index. In addition, the Bank of England’s policy update may cause some volatility and affect precious metals before Friday’s pivotal Bank of Japan monetary policy decision.
Gold Oct Futures has given a breakout above $3730 (~Rs 110,500), the next target would be $3800 (~Rs 113,500). If prices topout and fall below $3660 (~Rs 108,700), then only we could see futher profit booking.
Silver Nov Future prices have given a breakout above its consolidation range of $41.5 (~Rs 125,000) and $43.4 (~Rs 130,000) for the past few days. This rally has more room for upside towards $45 (~Rs 140,000).
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