Silver, Gold Futures Rebound on Weak Dollar, US-Iran Tensions

Gold and silver prices rebounded sharply in futures trade on Wednesday, with the white metal climbing nearly 4 per cent or Rs 9,665 to Rs 2.62 lakh per kg and the yellow metal edging higher to Rs 1.58 lakh per 10 grams on firm global trends.

Analysts said a weak US dollar and renewed geopolitical tensions between the US and Iran lifted the demand for safe-haven assets.

On the Multi Commodity Exchange (MCX), silver for March delivery surged by Rs 9,665, or 3.83 per cent, to Rs 2,62,213 per kg. The white metal had slumped by Rs 10,072, or nearly 4 per cent, to settle at Rs 2,52,548 per kg on Tuesday.

Gold futures also witnessed value buying with the April contract rising Rs 1,397, or 0.89 per cent, to Rs 1,58,200 per 10 grams. In the previous session, the yellow metal had finished lower at Rs 1,56,803 per 10 grams.

"MCX gold rose nearly 1 per cent, reclaiming levels above Rs 1.58 lakh per 10 grams, while silver outperformed the yellow metal with around a 3 per cent gain, crossing Rs 2.60 lakh per kg," Gaurav Garg, Research Analyst at Lemonn Markets Desk, said.

He added that investor sentiment strengthened after softer US economic data raised hopes of rate cuts and signalled slowing growth.

In the international market, Comex silver futures for March delivery gained USD 3.11, or 4 per cent, to USD 83.50 per ounce, while gold for April delivery went up by nearly 1 per cent to USD 5,071.86 per ounce.

"Gold and silver prices rose as US Treasury bond yields fell after data showed December retail sales growth stalled, signalling a softening economy ahead of key jobs data," Manav Modi, Analyst, Commodities at Motilal Oswal Financial Services Ltd, said.

The dollar index fell 0.23 per cent to trade at 96.59, lending further support to bullion prices in the global markets.

Meanwhile, Fed President of Cleveland Beth M Hammack said that the US central bank faces no urgency to change the setting of interest rates this year amid a "cautiously optimistic" outlook for economic activity.

Modi added that speculative positions in the precious metals have largely washed out of the market, and traders are now awaiting fresh triggers such as US jobs data report due to release later in the day and CPI numbers later this week.

An expert said: "Renewed US-Iran tensions also lifted safe haven demand after reports indicated that Washington may deploy additional naval assets (an aircraft carrier strike group) in the region, if negotiations over Tehran's nuclear programme fail".