Gold and silver jump after US midterm results; silver hits Rs 1,86,600 a kg on MCX

Gold and silver prices rose sharply on Wednesday after remaining under pressure for several days. The US midterm election results, a weaker dollar, a fall in US bond yields and geopolitical uncertainty across the world sent investors back to safe investments, leading to heavy buying of precious metals.

On the Multi Commodity Exchange (MCX) in the domestic market, gold for December delivery rose 2.21 per cent, or Rs 3,088, and hit a high of Rs 1,42,540 per 10 grams during the day. Silver for December delivery gained even more, rising 3.84 per cent, or Rs 6,902, to Rs 1,86,600 per kg.

At the time of writing, December gold was trading on MCX at Rs 1,42,300 per 10 grams, up more than 2 per cent. December futures silver was at Rs 1,86,373 per kg, up 3.71 per cent.

According to market experts, investors turned to safer options after President Donald Trump's party performed poorly in the US midterm elections. By the results, the Democratic Party has taken the lead in both the Senate and the House of Representatives, setting off discussion in global markets about new political possibilities. Analysts said the dollar weakened and US bond yields fell after the results, giving gold additional support. When the dollar is weak and bond yields are low, non-interest-bearing assets such as gold usually become attractive.

Crude oil prices softened in the previous trading session, easing concerns about inflation to some extent. Investors hope central banks will be able to keep some flexibility in monetary policy. Gold tends to perform well in such conditions. In the international market, gold on COMEX rose 2.32 per cent to $4,031.90 an ounce, while silver rose 4.10 per cent to $51.795 an ounce.

The market is also watching global geopolitical developments closely. Russia has agreed to three-way peace talks with Ukraine and the United States. Uncertainty remains over talks between Iran and the United States. Against this backdrop, investors are favouring gold as a safe investment.

According to technical analysis, the first major resistance level for gold on MCX is around Rs 1.41 lakh. The next resistance lies between Rs 1,43,000 and Rs 1,43,700. If prices fall, immediate support is at Rs 1,40,000, followed by support between Rs 1,37,500 and Rs 1,38,300.

Experts said that despite the recovery in prices, momentum indicators remain fairly weak. The RSI (relative strength index) is around 35. The MACD histogram is negative but continues to rise. This suggests there are as yet no firm signs of improvement in the technical structure.

Silver faces immediate resistance at Rs 1,86,000 to Rs 1,88,000. If prices hold above this level, the way could open towards the next resistance zone of Rs 1,94,000 to Rs 1,96,000. On the downside, Rs 1,78,000 to Rs 1,80,000 acts as immediate support, followed by a support zone between Rs 1,70,000 and Rs 1,72,000.

Experts said the future direction of gold and silver will depend on the US Federal Reserve's interest rate policy, the dollar index and the global political climate.