Why Did Gold Prices Surge Over 1% on Festive Demand?
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Synopsis
On November 25, a noteworthy rise in gold prices was observed, attributed to expectations of a US Federal Reserve rate cut and heightened festive demand. This article explores the factors driving this increase and what it means for investors and the market.
Key Takeaways
- Gold prices rose over 1% due to festive demand.
- Expectations of a US Federal Reserve rate cut are boosting market sentiment.
- Silver prices also increased, reflecting overall market trends.
- Support and resistance levels have been identified for gold and silver.
- Ongoing wedding season demand contributes to higher gold purchases in India.
Mumbai, Nov 25 (NationPress) Gold prices experienced a significant surge on Tuesday, driven by anticipation of a US Federal Reserve rate reduction and increased demand during the festive season.
During early trading on the Multi Commodity Exchange (MCX), gold futures for December delivery rose by 1 percent, reaching Rs 1,25,106 per 10 grams around 9:47 am.
Silver prices also saw an uptick. MCX Silver December contracts were trading 1.34 percent higher at Rs 1,56,551 per kg at the same time.
“In INR, gold has support at Rs 1,23,150-1,22,580 while facing resistance at Rs 1,24,650-1,25,200,” analysts reported.
“Silver has support at Rs 1,53,650-1,52,800 and resistance at Rs 1,56,140, 1,57,000,” they added.
The sharp increase in the domestic market was in line with a strong rally in global prices.
International gold prices surged almost 2 percent in the previous session as rising expectations of an interest rate cut by the US Fed pushed investors toward safer assets like gold.
Gold tends to thrive in environments with low-interest rates, as it does not yield interest like bonds or savings accounts.
As interest rates drop and other investment returns diminish, gold becomes a more appealing choice for investors.
In India, the ongoing wedding season has further bolstered demand, traditionally leading to an increase in gold purchases during this time.
Investors are now looking forward to essential economic data from the United States, including figures on retail sales, jobless claims, and producer price inflation.
The release of this data was postponed due to a recent US government shutdown and is anticipated to impact the Fed’s upcoming policy decisions.
Currently, the sentiment is optimistic, with analysts suggesting that price fluctuations may persist based on forthcoming global economic indicators, experts noted.
“Precious metals are receiving support from the New York Fed Governor’s dovish comments regarding a potential December rate cut, with market expectations for a 25 basis point cut rising to approximately 81 percent, a substantial increase from about 40 percent a week prior,” analysts stated.
Point of View
It's imperative to recognize the significant influence of festive demand and economic indicators on gold prices. The current market dynamics reflect a blend of domestic cultural practices and international economic policies. Understanding these aspects is essential for informed reporting and analysis in the financial sector.
NationPress
25/11/2025
Frequently Asked Questions
What factors are influencing gold prices?
Gold prices are influenced by US Federal Reserve rate expectations, festive season demand, and global market trends.
How does a low-interest-rate environment affect gold?
In a low-interest-rate environment, gold becomes more attractive as it does not yield interest like bonds or deposits.
What is the current support and resistance for gold?
Gold has support at Rs 1,23,150-1,22,580 and resistance at Rs 1,24,650-1,25,200.
How has the wedding season impacted gold prices in India?
Ongoing wedding season demand traditionally boosts gold purchases, contributing to price increases.
What economic data are investors awaiting from the US?
Investors are looking forward to retail sales, jobless claims, and producer price inflation figures from the US.
