Gold prices in India surged to an all-time high on Tuesday, reaching Rs 1,12,750 per 10 grams. This record-breaking rally results from rising expectations of further interest rate cuts by the US Federal Reserve (Fed) and heightened global uncertainties.
On the Multi Commodity Exchange (MCX), gold futures for October delivery rose by Rs 520, marking a 0.46% increase. The December contract also saw significant gains, climbing Rs 530 to settle at Rs 1,13,750, further solidifying its record.
Silver prices mirrored this upward momentum, with December futures appreciating Rs 461 or 0.34% to reach a new high of Rs 1,34,016 per kilogram. The March contract for silver rallied Rs 508 or 0.37% to touch Rs 1,35,397 per kg on the MCX.
Market analysts attribute this remarkable surge in bullion prices to a mix of factors including the Fed’s recent interest rate cuts, ongoing geopolitical tensions, and persistent safe-haven demand. “The rally in gold and silver shows no signs of slowing down, with both metals reaching fresh records,” stated Rahul Kalantri, Vice-President of Commodities at Mehta Equities Ltd.
Kalantri noted that the Fed’s recent 25 basis points rate cut and the potential for more easing by the end of the year have bolstered market sentiment. The subdued dollar index and a weaker rupee have also contributed significantly to the rise in domestic gold prices.
Strong central bank purchases and inflows into exchange-traded funds (ETFs) have further fueled the demand for precious metals. In the global markets, gold futures for December delivery reached a record peak of USD 3,794.82 per ounce.
“The recent record in gold prices reflects expectations of impending interest rate cuts from the Federal Reserve. As the labour market weakens, market participants predict two more cuts by the year-end,” commented Jigar Trivedi, Senior Research Analyst at Reliance Securities.
The December silver futures trading at USD 44.19 per ounce faced minor fluctuations. Trivedi added that traders are keenly awaiting remarks from Fed Chair Jerome Powell regarding the economic outlook. The upcoming release of the Personal Consumption Expenditures (PCE) price index later this week is poised to provide further insights into the Fed’s monetary policy decisions.
Furthermore, geopolitical risks associated with the protracted Russia-Ukraine conflict and continuing tensions in the Middle East have heightened demand for safe-haven assets. This scenario has effectively prevented any significant corrections in bullion prices despite their elevated levels.
