Gold and silver prices climbed to their highest levels in more than three months in the national capital on Friday, extending gains for the second consecutive session as weakness in the US dollar, lower long-term Treasury yields and firm international markets boosted demand for precious metals.
Gold of 99.9 per cent purity rose ₹1,200 to ₹1,63,500 per 10 grams, inclusive of taxes, compared with ₹1,62,300 in the previous session, according to local traders. The yellow metal is now trading around levels last recorded on May 19, when it stood at ₹1,63,600 per 10 grams. Silver registered an even sharper move, jumping ₹5,000 to ₹2,50,000 per kg from Thursday’s close of ₹2,45,000. It has gained ₹15,000 in just two sessions and is now at its highest level in 15 weeks.
Dollar weakness lifts bullion
The domestic rally followed strong gains in overseas markets. Spot gold advanced about 2 per cent, or $81.58, to $4,600.91 an ounce, while silver gained nearly 3 per cent to $69.87 an ounce. Gold was trading around its highest level since May 18 and remained on course for a third consecutive weekly advance.
The latest rally has been supported by a combination of currency and bond-market movements. A weaker dollar typically makes dollar-denominated bullion more attractive to buyers holding other currencies, while falling bond yields reduce the opportunity cost of holding gold, which does not generate interest.
Gaurav Garg, Head of Research at Lemonn Markets Desk, said gold was heading towards its third straight weekly gain, while silver continued to benefit from the softer dollar and declining longer-term US Treasury yields. Strong investment demand and volatility across currency and bond markets have provided additional support to bullion.
Gold has gained more than 4 per cent during the week, according to Praveen Singh, Head of Commodities at Mirae Asset ShareKhan. A major trigger has been the US Treasury Department’s decision to expand its bond-buying programme and double long-term debt buybacks in an effort to contain borrowing costs.
US bond move adds momentum
The Treasury move contributed to a sharp decline in the dollar and bond yields, providing fresh momentum to gold. Although US yields subsequently stabilised as investors questioned how durable the impact of the measures would be, bullion retained much of its advance.
A modest retreat in international crude oil prices has also supported precious metals. Meanwhile, investors continue to assess the outlook for US interest rates, with upcoming economic indicators expected to provide clues about the Federal Reserve’s next policy moves. Markets are particularly watching US S&P PMI data for signals about economic activity and the likely trajectory of monetary policy.
Expectations surrounding interest rates remain crucial for gold. Signs of softer economic conditions or lower borrowing costs can strengthen demand for bullion, while higher yields and a stronger dollar generally create headwinds.
Geopolitical risks support demand
Geopolitical uncertainty has added another source of support. Markets are monitoring developments involving Iran, with the Trump administration preparing to announce what it has described as its toughest economic sanctions yet against Tehran. Iran has dismissed the move, arguing that previous pressure tactics have failed.
Such uncertainty often increases demand for gold as investors seek assets traditionally regarded as stores of value during periods of financial or geopolitical stress. Combined with volatility in US bond and currency markets, the tensions have helped keep investment interest elevated.
Silver has benefited from the same broad sentiment, with its ₹15,000 rise over two sessions taking domestic prices to levels last seen in early May. On May 4, the metal had been quoted at ₹2,49,500 per kg.
The immediate direction for bullion is now likely to depend on movements in the dollar, Treasury yields and incoming US economic data. For Indian buyers, however, the latest rally has already pushed both metals back towards levels unseen since May, with gold above ₹1.63 lakh per 10 grams and silver touching the psychologically significant ₹2.5-lakh-a-kilogram mark.