A nuanced tug-of-war defined precious metals trading early this week, with gold prices exhibiting resilience despite mild corrections. While profit-taking and subdued physical demand exerted downward pressure, significant macroeconomic undercurrents—primarily a weakening US dollar and heightened anticipation of monetary policy easing—acted as a firm buffer against deeper losses.

As of Monday morning, MCX gold February futures were virtually flat, trading 0.04% lower at approximately ₹1,30,409 per 10 grams. MCX silver March futures, however, saw more pronounced movement, declining by 1% to around ₹1,81,600 per kilogram, following a spectacular rally in the previous session that saw silver touch a historic peak.

The Macro Chessboard: Fed Expectations and Dollar Dynamics

All eyes are fixed on the upcoming Federal Open Market Committee (FOMC) meeting, with the policy announcement scheduled for December 10. Market sentiment is overwhelmingly leaning toward a shift, as reflected in the CME FedWatch Tool, which currently indicates an 88.4% probability of a 25-basis-point rate cut. This expectation has been a key catalyst, pressuring the US Dollar Index to hover near six-week lows. A softer dollar typically enhances the appeal of dollar-denominated gold for holders of other currencies, providing fundamental support.

Recent inflation data adds complexity to the Fed’s decision. The core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge, showed a year-on-year increase of 2.8% in September. Analysts scrutinizing such figures often turn to resources like Reuters’ macroeconomics coverage for deeper insight into how persistent inflation might influence the central bank’s longer-term trajectory beyond an immediate cut.

“The high volatility in bullion is a direct reflection of the market pricing in a pivotal Fed pivot,” commented Manoj Kumar Jain, Head of Commodity Research at Prithvifinmart. “While a retreating dollar and rate cut hopes are constructive, prices are also contending with rebounding bond yields and physical market dynamics, especially in silver.”

Silver’s Speculative Surge and Key Technical Levels

Silver’s recent breakout to record highs underscores a market driven by more than just gold’s traditional drivers. “Specific supply tightness in physical deliveries, coupled with strong industrial demand mirroring gains in base metals, has created a perfect storm for silver,” Jain noted. Investors seeking broader context on industrial metal trends can find valuable analysis through specialized platforms like Kitco Metals’ market commentary.

For traders navigating this volatile landscape, Jain outlines specific strategic levels:

  • Gold (MCX): Support is positioned at ₹1,29,740 and ₹1,29,000, with resistance at ₹1,31,200 and ₹1,32,000. The recommended strategy is to “buy on dips” near ₹1,29,800 and ₹1,29,000, with a stop loss below ₹1,27,700.

  • Silver (MCX): Support lies at ₹1,81,800 and ₹1,80,000, while resistance is seen at ₹1,85,500 and ₹1,88,000. Buying near the ₹1,81,500 and ₹1,79,500 range, with a stop loss below ₹1,76,600, is suggested.

In international terms, gold faces support at $4,200 and $4,164 per troy ounce, with resistance at $4,250 and $4,288. For silver, key levels are support at $57.70 and $56.80, and resistance at $60.00 and $61.40 per troy ounce.

The Week Ahead: Policy in Focus

The immediate trajectory for bullion prices hinges almost entirely on the Fed’s messaging. A confirmed rate cut could unleash the next leg higher, particularly if accompanied by a dovish outlook. However, any hesitation or data-dependent caution from the central bank could trigger profit-taking. As highlighted in comprehensive forecasts by institutions like the World Gold Council, the evolving narrative around interest rates and real yields will remain the dominant force guiding gold and silver investment flows through year-end. For now, the market remains in a holding pattern, balancing technical corrections against a potent bullish macroeconomic backdrop.