Gold, Silver Price Outlook: Gold, silver face near-term pressure; Kotak Neo’s Anindya Banerjee on key levels

Gold and silver prices fell more than 1% on the Multi Commodity Exchange (MCX) on Wednesday, September 2, tracking weakness in global markets.

MCX gold October futures were down 1.03% at Rs 1,50,164 per 10 grams, while MCX silver December futures fell 1.26% to Rs 2,32,464 per kg around 9:05 am.

In the global market, gold prices fell to their lowest level in more than three weeks as the US dollar and bond yields moved higher. Rising crude prices and expectations of higher US interest rates have also weighed on precious metals.

Against this backdrop, Anindya Banerjee, Head of Research – Currency, Commodities and Interest Rates at Kotak Neo, expects the near-term outlook to remain volatile but sees the broader trend for gold and silver as positive.

Q: Why are gold and silver prices under pressure?

The short- to medium-term trend for precious metals is being driven largely by the US Federal Reserve's rate cycle, according to Banerjee.

The US two-year yield has risen to around 4.4% and remains an important indicator of where the Fed's rate policy could head. Gold and silver do not pay interest, so higher short-term rates can make them less attractive compared with yield-bearing assets.

Crude oil is adding to the pressure. If Brent continues to move towards the $100-$102 zone, higher inflation expectations could push US short-term yields higher and weigh further on precious metals.

Q: Is the long-term gold outlook still positive?

Yes, according to Banerjee. He sees de-dollarisation and central-bank buying as key drivers of the longer-term gold trend. Central banks bought 289 tonnes of gold in the June quarter, a record for the quarter, while China has continued to add to its reserves for 21 consecutive months.

Banerjee said trade-surplus economies in East Asia, particularly China, are recycling part of their surpluses into gold through official and unofficial channels. This is one reason why price corrections continue to attract buyers.

Q: How low can gold prices fall?

Banerjee sees the current decline as a correction rather than a reversal of the broader gold trend. He expects the downside to remain limited in duration and depth as long as central-bank and physical buying continues, with $4,150-$4,200 emerging as the next major support zone.

According to the research report at Kotak Neo, spot gold's current market price is $4,306. Support is seen at $4,267, $4,244 and $4,166, while resistance comes in at $4,345, $4,369 and $4,446.

Q: What are the key levels for MCX gold?

The current market price for MCX gold October futures is Rs 1,50,225. On the downside, Rs 1,49,058 and Rs 1,48,338 are the first support levels, while Rs 1,46,004 is the next key support to watch. On the upside, resistance comes in at Rs 1,51,392, followed by Rs 1,52,112 and Rs 1,54,446.

Gold October futures were trading at Rs 1,50,164 per 10 grams around 9:05 am on Wednesday, keeping the contract close to the report's current market price.

Q: What is the outlook for silver?

Silver is also under pressure in the near term, although Banerjee remains positive on its medium- to long-term outlook. He sees $62.80 as an important immediate support. If prices slip below this level, silver could move towards $61, he said.

According to the research report at Kotak Neo, spot silver's current market price is $63.75. Support is seen at $62.80 and $62.20, while resistance comes in at $64.70, $65.25 and $67.15.

For MCX silver December futures, support is at Rs 2,29,952 and Rs 2,28,502, followed by Rs 2,23,806. Resistance is seen at Rs 2,34,648, Rs 2,36,098 and Rs 2,40,794.

MCX silver December futures were trading at Rs 2,32,464 per kg around 9:05 am on Wednesday, close to the report's current market price of Rs 2,32,300.

Q: How is crude oil affecting gold prices?

Oil prices have become an important factor for precious metals, as a sustained rise could push up inflation expectations and keep pressure on interest rates.

Brent crude is trading around $96.50 after rising for a third straight session amid the latest escalation between the US and Iran.

Banerjee sees $98 as an important resistance level, with support at $92 and then $90. The $100-$102 zone remains the key barrier. A sustained move above $102 could open the way towards $120 and higher.

For now, he expects $102 to act as a cap and sees room for another pullback in crude if there is no major escalation.

Q: Can the Fed trigger a deeper correction in gold?

The immediate worry for gold and silver is the possibility of the US Federal Reserve keeping interest rates higher for longer. But Banerjee believes the central bank may have limited room for a prolonged series of rate hikes.

He points to several factors that could make aggressive tightening difficult, including a softer macroeconomic backdrop, high US debt, stress in the bond market, the fragile yen carry trade and the heavy concentration of equity markets in AI-related stocks.

That leaves a gap between what the Fed says and what it may actually be able to do. Banerjee believes this could keep the current correction from becoming too deep or lasting too long.

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