The Fed’s 25-basis-point rate cut has become the main driver behind the sudden rise in precious metal prices. When the Federal Reserve reduces interest rates, borrowing becomes cheaper, which encourages economic activity worldwide. At the same time, lower interest rates reduce returns from fixed-income instruments like bonds or savings accounts. Because of this, investors often move their money toward safe-haven assets such as gold and silver.
On the MCX, gold futures for February touched nearly ₹1,30,575 per 10 grams, marking a strong upward trend. Silver performed even more aggressively and reached a historic high of around ₹1,93,452 per kilogram. This quick jump shows how sensitive precious metals are to global financial changes. A simple example can explain this easily. Imagine you are holding money in a bank that gives 7 percent interest, and suddenly the interest drops to 4 percent. In such a situation, you naturally look for safer and more rewarding alternatives, and gold becomes one of the top choices. This is exactly how large investors behave on a global scale.
Why Silver Prices React More Strongly
While gold is primarily used as an investment and jewellery asset, silver plays two roles. It is both a precious metal and a major industrial metal. Silver is used in electronics, solar panels, medical equipment, and even automobiles. This dual nature makes silver more sensitive to economic changes compared to gold.
When interest rates fall, industries expect growth because loans become cheaper and global demand begins to rise. Silver, being a part of industrial production, benefits directly from this growth. For example, if a solar panel manufacturer expects higher demand in the coming months, they will start purchasing more silver in advance. This early buying increases the price even before the real demand appears in the market. That is why silver often moves faster than gold and reaches new highs during such economic situations.
Gold and Silver Rally Explained — What Triggered the Surge
The combination of reduced interest rates, economic optimism, and increased appetite for safe-haven investments has created a strong rally in both metals. Investors feel more confident placing their money in assets that hold long-term value, especially when global signals suggest financial easing. When the Fed cut rates by 25 bps, the market immediately priced in the expectation that more cuts might follow in the upcoming months. This anticipation alone was enough to create an upward push in prices, even before any future policy announcements.
Another factor behind the surge is currency movement. When the US dollar weakens after a rate cut, gold and silver become cheaper for holders of other currencies. This increases international buying, which further pushes prices on Indian exchanges like MCX.
Key Price Levels and Expert Views
Analysts have identified several important support and resistance levels that traders are closely watching. Gold currently has strong support around ₹1,29,100 to ₹1,28,500 per 10 grams. If prices stay above this range, upward momentum is likely to continue. Resistance is expected at around ₹1,31,200. If gold breaks this level, new highs are possible.
Silver has shown even higher volatility. Its support lies around ₹1,84,000 to ₹1,86,500 per kilogram, while resistance sits near ₹1,93,300 to ₹1,94,000. In trading terms, support works like a floor: if the price drops and hits the floor, it often bounces back. Resistance works like a ceiling: if the price rises and hits the ceiling, it might fall again. This simple concept helps even new traders understand market behavior.
Experts also highlight that if global inflation cools down and economic activity increases, silver may continue to outperform gold. However, if geopolitical tensions rise, gold may see a stronger upward movement as investors prefer stability over industrial demand.
Impact on Everyday Buyers and Investors in India
For everyday buyers in India, especially those planning gold purchases for weddings or festivals, understanding this price trend is extremely important. When global interest rates fall, gold prices in India usually rise for some time. This means delaying your purchase could result in higher costs later. For example, a family planning to buy gold jewellery worth ₹3 lakhs might end up paying ₹10,000 to ₹15,000 more in just a few weeks if the upward trend continues.
Silver buyers need to be even more cautious because silver prices can swing sharply. An investor buying silver coins or bars may benefit from the rise, but they must also be prepared for sudden corrections. Silver can move up quickly but also fall just as fast because of its dependence on industrial demand.
Another important point is that global events—even those happening thousands of kilometres away—can directly influence Indian markets. Many people believe local prices depend only on Indian demand, but this is not entirely true. The gold you buy in India is priced based on international market trends, currency fluctuations, and global investor sentiment.
Should You Buy Now or Wait?
If you are a long-term investor, buying during a strong global trend can still be beneficial because gold typically holds its value over time. For someone purchasing for personal use, like weddings, delaying the purchase may not be ideal because further price increases are likely if more rate cuts happen.
Silver, while riskier, has strong potential if industrial demand continues to grow. However, buyers must be aware of volatility. A good example is the recent rise: silver jumped nearly 2.5 percent in a single session, which shows how unpredictable it can be.
