Support is at $4160/$4115/$4085/$4050. Resistance is at $4245/$4300/$4381 (all-time high). (AI image)
Gold price prediction: Gold prices are expected to rise on positive global cues, says Praveen Singh, Senior Fundamental Research Analyst- Currencies and Commodities at Mirae Asset Sharekhan. The analyst believes that ‘buy on dips’ is the strategy that investors should adopt. Here’s his outlook on gold and silver prices:Gold Performance:
- On December 8, spot gold traded in a rather narrow range of $4176-$4219 as US yields spiked higher. At the time of writing this article, the yellow metal was trading at $4192, down 0.1% for the day, while the MCX February gold contract at Rs 129,770 was down 0.36%.
- Earlier, in the week ending December 5, the yellow metal closed with a weekly loss of nearly 0.95% at $4198.
US Dollar and yields:
- At the time of writing this article, the US Dollar Index, boosted by higher yields, was hovering around 99.20, up around 0.20% for the day.
- Ten-year US yields at 4.17% were up by 0.90%, while 2-year yields at 3.59% were up around 1%.
- US treasury yields climbed to the highest in more than two months on huge issuance by the Treasury (in total $119 billion this week) and inflation concerns as the Fed cuts rate into elevated inflation.
- New York Treasury term premia, a measure of premium creeping higher, has risen to 0.7% — around September level.
Fed Watch:
- The markets are placing 90% odds on the FOMC cutting Fed Fund rate by 25 bps on December 10. Thereafter, markets assign 90% probability of the Fed cutting one more time by April.
ETFs and COMEX inventory:
- As of December 5, total known global gold ETF holdings stood at 97.84MOz, highest since October 24. ETF holdings have risen 18% YTD (or 15 MOz, equivalent to 466 tons of net inflow).
- Eligible COMEX Gold inventory stood at 18.277 MOz as of December 5, which is down 18.58% from the all-time high level of 22.45 seen in April 2025.
China’s central extends its gold buying spree:
- China’s Central Bank PBoC increased its gold reserves again as it extended its gold buying spree to a 13th straight month as it bought 30,000 Ounces (around 1 ton) of gold.
- China’s forex reserves surged to the highest level since 2016 to nearly $3.35 trillion.
Bank for International Settlements (BIS) on gold:
- According to the BIS, retail investors’ gold buying frenzy has pushed the yellow metal out of its traditional safe haven pattern to a more speculative asset. The Bank added that while institutional investors bought gold to hedge their positions in over-extended equities, the retail investors’ buying has amplified the trend. It also noted the fact that both equities and gold have been rallying together for the past few quarters, which is a rare occurrence in at least the last fifty years. The Bank cited the case of gold crashing in 1980s.
Data and event roundup:
- Japan’s 3Q annualized GDP came in at -2.3% as weak housing and exports weighed on the economy. However, this contraction is being seen as a blip. China’s November trade surplus widened to $111.70 (forecast $103.10 billion) from $90.10 billion in October.
- China’s trade surplus exceeded $1 trillion for the first time.
- China’s Politburo, in its December huddle, has cited boosting domestic demand as its top goal in 2026 as top leaders pledged to strengthen cross-cyclical policy measures as they keep proactive fiscal and moderately loose monetary policies as possible tools to achieve their goals. The budget deficit target for 2026 could be around this year’s 4% target.
- US data released on Friday did little to change Fed rate cut probability. Real Personal spending in September stagnated Vs forecast of a 0.1% increase m-o-m. PCE Price Index data (Sep.), core PCE Price Index rose 2.8% y-o-y (forecast 2.8%, prior 2.7%). University of Michigan Sentiment (Dec. prel.) came in at 53.3 Vs the estimate of 52; it continues to be mired around historical low. One-year inflation expectations eased from 4.5% to 4.1% Vs the estimate of 4.5%.
Upcoming data:
- Major US data on tap this week include JOLTs job openings (December 9), Employment cost index (Dec. 10) and trade balance (Dec. 11). Out of Asia, focus will be on China’s new Yuan loans, PPI and CPI (Dec. 10).
- However, the most important event of the week is upcoming Fed’s monetary policy due on December 10, wherein the central bank is widely expected to cut the Fed Fund rate by 25 bps to 3.50%-3.75% target range. In addition to the rate decision, investors will pay close attention to the Fed’s summary of projections which will include the Fed’s forecasts of inflation, GDP and unemployment, too.
Gold Price Outlook:
- Spot gold is well supported on rate cut expectations, rising fiscal concerns, deteriorating US job market and global trade flows suffering due to tariff wars. Geopolitical tensions remain elevated as the Ukraine talks have failed to make any headway. Also, President Trump calling for revival of Monroe doctrines is positive for the metal in the medium to long term.
- Should the US nonfarm payroll report show continuing weakness in the job market, the yellow metal can reach new record highs soon.
- Buying the dips is advisable.
- Support is at $4160/$4115/$4085/$4050. Resistance is at $4245/$4300/$4381 (all-time high).
Silver Price Outlook:
- Silver ETFs have recorded a net inflow of 132.50 MOz YTD as of December 6, which is equivalent to a net inflow of around 4121 tons. ETF holdings are up 18.50% YTD.
- One-month LBMA swap rate, although significantly lower than the October frenzy level of 34.95%, is currently at 6.41%, which is quite elevated as compared to historical standards of 0.3%-0.5%.
- We continue to remain bullish on silver as Chinese silver inventories in SHFE and SGE warehouses have fallen to around decade-low levels. In addition, huge ETF inflows continue to keep the metal buoyant despite surging US yields. It is advisable to buy the dips with stoploss below $56.40/$54 for a target of $62 in the coming weeks/months.
(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
