Gold and silver prices kept their upward momentum on an expectation of a breakthrough in U.S. stimulus talks. On Multi Commodity Exchange, February gold futures increased by 0.35%. They settled at Rs 49,770 per 10 gram, extending gains to the third day. Meanwhile, silver futures boosted 1.2% and touched Rs 66,746 per kg. Significantly, in the previous session, the yellow metal futures had advanced 0.33%, which equals to Rs 160 per 10 gram. In comparison, the white metal had boosted 1.5% or approximately Rs 1,000 per kg.
According to Geojit Financial Services, as long as MCX gold prices hold the Rs 49,170 level, further gains could be expected. However, a decline below that level could weigh on rates.
Globally, the gold price was steady close to its one-week high. It was supported by optimism that U.S. lawmakers will soon progress towards a stimulus deal and a weaker greenback.
Additionally, spot gold had a value of $1,864.36 per ounce. U.S. Federal Reserve’s pledge to keep rates low until an economic return is secure also supports gold rates.
The case for fiscal stimulus is robust
In its last policy meeting of the year, the Fed pledged to keep its massive asset-purchase program until it saw excellent employment and inflation progress. According to Chairman Jerome Powell, that the case for fiscal stimulus is robust.
A weaker dollar has aided gold’s increase. Significantly, the U.S. dollar index increased by 0.32% and settled at 90.073.
Additionally, silver eased by 0.3% and ounce $25.27 an ounce while platinum dropped 0.3% to $1,031.50. Palladium advanced 0.3% and settled at $2,333.83.
Furthermore, gold traders now will watch out for the Bank of England’s policy decision, due later in the day. The yellow metal a hedge against inflation and currency debasement.
However, gold prices remain significantly off the August highs of Rs 56,200 as optimism about coronavirus vaccines. The beliefs of a strong global economic return have taken some shine off gold.
According to Kotak Securities, silver also recovered sharply from recent lows. U.S. leaders intensified efforts to finalize a stimulus deal. Additionally, general optimism about the Chinese economy and industrial activity recovery has also supported the white metal. Kotak Securities added that China’s industrial production and retail sales data showed continued recovery.
Furthermore, prospects of additional stimulus and COVID-19 curbs in different parts of the world support gold. Hence, India’s yellow metal prices are still up approximately 25% so far this year.