Gold and silver prices surge more than 2% and 5% as US Fed set to ease monetary policy in 2024

Gold opened on the Multi Commodity Exchange (MCX) on Wednesday at Rs 61,391 per 10 grams and hit an intraday low of Rs 61,391. In the international market, prices hovered around $ 2,033.03 per troy ounce.

Meanwhile, silver opened at Rs 71,849 per kg, hit an intraday low of Rs 71,849 on the MCX, and hovered around $23.91 per troy ounce in the international market.

Notably, gold and silver saw a substantial gain on the Comex in the early morning trade on news that the US Federal Reserve may follow a flexible monetary strategy. Silver proved the more significant riser, with a 5% increase, compared to Gold's 2%.

Manav Modi, Analyst, Commodity and Currency, MOFSL, said, “Gold and Silver prices are up by more than 2% and 5%, respectively, on Comex in the early morning trade as the Federal Reserve looks to loosen monetary policy in 2024.”

Per the expectations, the Federal Reserve kept interest rates unchanged, between 5.25% and 5.50%; however, the central bank highlighted slowing growth and easing inflation, a slight shift in its previous narrative.

Anuj Gupta, Head of Commodity and Currency at HDFC Securities, said, “The Federal Reserve kept interest rates steady on Wednesday for the third straight meeting and signalled deeper cuts for next year as inflation is expected to cool faster than initially anticipated."

Along with its more neutral outlook, the dot plot indicated that the central bank sees the Federal Funds rate at 4.6% by the end of 2024, down from September's forecast of 5.1%.

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According to the economic projections, the central bank sees GDP growing 1.4% next year, down from the previous estimate of 1.5%, while the inflation forecast is at 2.4% in 2024.

Modi said, “Bets for a rate cut in March is back to 65%, supporting the sentiment and boosting safe-haven appeal for Gold and silver prices. On the data front, PPI yesterday was reported lower than expectations; focus today will be on US Retail Sales data.”

Amit Khare, Associate Vice President at GCL Broking, said, "MCX Gold and Silver gave mixed closing yesterday. February Gold closed at 61199(+0.04%), and March Silver closed at 71532(-0.45%). As per the daily chart, Bullions were trading near the demand zone yesterday. FOMC keeps key rates unchanged and signals three rate cuts in 2024, So the fundamentals are positive for the market. Traders are advised to make fresh buy positions in Gold and Silver near the given support level one with the stop loss of support level two and book near the given resistance levels: Gold February Support 61000/60800 and Resistance 61600/62000. Silver March Support 71400/70600 and Resistance 72500/73500."