Gold prices rise 1% in a volatile week. What’s in store for investors from Monday?

Gold may have zigzagged through periods of red and green this week, pressured by tapering Fed rate cuts and solid U.S. employment data, but the metal ultimately held up. By the end of Friday, the yellow metal had quietly secured a 1% gain for the week. The Indian rupee’s fall to a record low against the dollar has added a new layer of complexity for precious metals traders, and experts warn that volatility is unlikely to subside in the coming week.“Gold is expected to remain volatile in a range of Rs 1,20,000 to Rs 1,24,000. The yellow metal traded highly volatile as Comex gold fell 1% to $4,035, down $41, while MCX gold rose Rs 300 following a sharp depreciation of the rupee of almost 1% from 88.70 to 89.60. The weak rupee offset Global pressures are keeping domestic prices resilient. Stronger-than-expected US non-farm payroll data has dampened expectations of a Federal Reserve rate cut in December and will weigh on global sentiment,” said Jateen Trivedi, research analyst at LKP Securities.

The latest US Fed Minutes reveal divisions among Federal Reserve officials over the need for interest rate cuts, torn between concerns about a weakening labor market and persistent inflation. Traders now estimate only a 29% chance of a rate cut next month.The minutes of the Fed meeting showed a divided Federal Reserve cut rates last month despite concerns that easing too quickly could undermine progress on inflation, which has been above the 2% target for more than four years. Governor Powell reinforced a cautious tone, stating that a rate cut in December is not a “foregone conclusion.”

How should you trade gold and silver?

“Gold continues to maintain a strong bullish framework. Comex gold closed at $4,079.5, while MCX gold settled around Rs 1,24,191, finding support right at the multi-month rising trendline. A weekly Doji on the slope, after last week’s inverted hammer, indicates strong accumulation and rejection of lower levels, reflecting resilient investor interest,” said Ponmudi R, CEO of Enrich Money, a SEBI registered online trading and wealth technology company.

The key MCX support is at Rs 1,21,800 – Rs 1,22,000, with a hold above this zone opening short-term targets at Rs 1,25,500 – Rs 1,27,200 and medium-term targets at Rs 1,27,200 – Rs 1,28,800+, while short-term resistance is seen at Rs 1,24,500 – Rs 1,25,000.

As for silver, futures prices corrected by almost 1% in December. “On MCX, the zone of Rs 1,50,000-Rs 1,51,000 forms immediate make-or-break support, while near-term resistance lies at Rs 1,56,000-Rs 1,58,000. These levels are consistent with previous pattern zones that triggered sharp rebounds during the September-October pullbacks,” Ponmudi added.

As long as the support holds, the bullish structure remains valid, with upside projections towards Rs 1,58,000, Rs 1,62,000 and Rs 1,65,000 – Rs 1,68,000 on MCX. A decisive breakout above resistance could trigger the next leg higher.

As a non-yielding asset, gold usually attracts stronger yields when interest rates fall or economic pressure increases. The recent reopening of the US government after an unprecedented 43-day shutdown has also helped calm investors by ensuring the timely release of key economic indicators.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)