Gold & Silver Stuck in a Range Despite Rate Cut Hopes — What’s Holding Them Back?
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Gold and Silver Stuck in a Range Despite Rate Cut Hopes. What Is Holding Them Back
Gold and silver prices are showing surprising restraint. Despite growing expectations of US rate cuts, bullion has remained largely range bound in recent sessions.
On February 25, gold steadied near $5,146 per ounce while silver hovered around $87 per ounce after a recent pullback. Normally, falling rate expectations tend to boost precious metals. So why is the rally missing momentum this time?
The answer lies in a mix of macro cross currents including a firm US dollar, improving risk sentiment, and geopolitical uncertainty that is not yet strong enough to trigger aggressive safe haven flows.
Let us decode what is really happening.
TLDR
- Gold and silver are range bound despite expectations of rate cuts.
- A stronger US dollar is capping upside in bullion.
- Equity market optimism is reducing safe haven demand.
- Geopolitical developments are creating volatility but not panic buying.
- Indian investors should watch dollar trend and global risk sentiment.
Recent Price Action in Gold and Silver
Gold recently touched a three week high but failed to sustain momentum. Spot gold held near $5,146 per ounce after slipping more than 1 percent in the previous session. US gold futures for April delivery also edged lower.
Silver followed a similar path, easing to around $87 per ounce after hitting a two week high earlier.
This kind of sideways movement usually signals a market that is waiting for stronger directional triggers.
Why Rate Cut Hopes Usually Support Gold
Gold is a non yielding asset. When interest rates fall, the opportunity cost of holding gold declines. This typically attracts fresh buying.
Markets are currently pricing in three rate cuts of 25 basis points each this year, according to FedWatch expectations. Under normal conditions, this would have pushed gold higher.
But markets rarely move on one factor alone.
What Is Holding Gold and Silver Back
Strong US Dollar Acting as a Headwind
The US dollar index has been inching higher. Even a modest rise in the dollar can weigh on bullion.
When the dollar strengthens:
- Gold becomes more expensive for global buyers
- International demand softens
- Commodity momentum slows
This is currently one of the biggest reasons why gold and silver are not breaking out.
Equity Market Optimism Reducing Safe Haven Demand
Global equities have been firm, supported by strong optimism around artificial intelligence led growth.
When risk assets perform well, investors typically reduce allocation to safe haven assets like gold.
Think of it this way. If stock markets are rising steadily, the urgency to hold defensive assets falls. That is exactly what is happening now.
Geopolitical Uncertainty Is Not Extreme Yet
Markets are watching developments on two fronts:
- US trade tariff moves
- Iran and US nuclear talks in Geneva
While these factors are creating background uncertainty, they have not yet escalated into full blown risk events.
Bullion usually rallies sharply only when geopolitical stress becomes acute and unpredictable.
Fed Officials Signalling Patience
Although markets expect rate cuts later in the year, Federal Reserve officials have not indicated any immediate policy shift.
This gap between market expectations and official commentary is keeping traders cautious.
Technical View: Key Levels to Watch
According to commodity market estimates:
- Support for April gold is near ₹1.58 lakh per 10 grams
- Resistance is seen around ₹1.62 lakh per 10 grams
This clearly reflects a range bound structure in the near term.
Until gold decisively breaks above resistance or below support, traders should expect choppy moves rather than a trending rally.
Impact on the Indian Bullion Market
For Indian investors, gold prices are influenced by three major factors:
- International gold prices
- Rupee dollar movement
- Import duty structure
Currently, even though global gold is steady, a firm dollar can indirectly keep domestic prices elevated but capped within a band.
Real world example
In past cycles, such as 2022 and early 2024, gold entered similar consolidation phases when:
- Rate cut hopes existed
- But the dollar remained firm
- And equity markets stayed strong
Eventually, gold broke out only when either the dollar weakened sharply or geopolitical risks intensified.
What Could Trigger the Next Big Move
Investors should watch these catalysts closely.
Bullish triggers for gold
- Clear signal of Fed rate cuts
- Sharp fall in US dollar
- Escalation in geopolitical tensions
- Equity market correction
Bearish triggers
- Persistent dollar strength
- Strong global growth data
- Continued equity rally
- Delay in rate cut cycle
Markets are currently in a wait and watch mode.
Strategy for Investors and Traders
For short term traders
Expect volatility within a band. Range trading strategies may work better than aggressive directional bets.
For long term investors
Gold continues to play an important portfolio diversification role. Periods of consolidation often provide staggered accumulation opportunities.
For Indian investors
Monitor:
- Dollar index trend
- RBI stance on liquidity
- Global risk sentiment
- MCX gold technical levels
Disciplined allocation remains more important than short term price moves.
How Swastika Investmart Helps You Track Commodity Trends
Commodity markets move quickly and often react to global cues overnight. Having the right research support can make a big difference.
Swastika Investmart empowers investors with:
- SEBI registered research credibility
- Advanced commodity tracking tools
- Real time market insights
- Reliable customer support
- Strong investor education framework
Whether you are trading MCX gold or building long term exposure to precious metals, informed decisions matter.
Frequently Asked Questions
Why are gold and silver not rising despite rate cut hopes
Because the strong US dollar and firm equity markets are offsetting the positive impact of expected rate cuts.
Does a stronger dollar always hurt gold
Generally yes. A stronger dollar makes gold more expensive globally and tends to cap demand.
What are the key levels for gold in India
Near term support is around ₹1.58 lakh per 10 grams and resistance is close to ₹1.62 lakh per 10 grams for the April contract.
Is this a good time to buy gold
Long term investors may consider staggered buying, but short term traders should be cautious due to range bound movement.
What should investors watch next
Focus on Federal Reserve signals, dollar index movement, and geopolitical developments for the next directional cue.
Conclusion
Gold and silver are currently caught between supportive rate cut expectations and restrictive macro forces like a firm US dollar and strong equity sentiment. Until one side decisively dominates, bullion is likely to remain range bound with intermittent volatility.
For investors, this is not a time for emotional decisions but for disciplined monitoring and strategic positioning.
With Swastika Investmart’s research driven platform, investors can stay ahead of global commodity trends and make smarter, well informed market decisions.
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