Gold prices soared to an all-time high of Rs 1,12,750 per 10 grams on Tuesday, fueled by expectations of U.S. Federal Reserve rate cuts. The rise in prices occurred in the domestic futures market as global trends inspired safe-haven buying ahead of Federal Reserve Chair Jerome Powell’s comments.
On the Multi Commodity Exchange (MCX), gold futures for October delivery rose by Rs 520 or 0.46 percent, achieving a new milestone. Similarly, December contracts climbed Rs 530 or 0.46 percent, reaching Rs 1,13,750 per 10 grams, marking their own record.
The silver market mirrored this upward trend, with December futures appreciating Rs 461 or 0.34 percent to reach Rs 1,34,016 per kilogram. For March next year, the price rallied to Rs 1,35,397 per kg, indicating a surge of Rs 508 or 0.37 percent.
Market analysts attribute the rally in bullion largely to the Federal Reserve’s recent interest rate cuts, geopolitical unrest, and high demand from central banks. “The rally in gold and silver shows no signs of slowing,” said Rahul Kalantri, Vice-President of Commodities at Mehta Equities Ltd. He affirmed that both metals are at their strongest levels in years.
Kalantri pointed out that the Fed’s decision to cut rates by 25 basis points, combined with more cuts anticipated by year-end, positively affected market sentiment. Additionally, a weaker dollar index and an unstable rupee have further boosted domestic gold prices.
Factors such as persistent central bank purchases and robust inflows into exchange-traded funds (ETFs) contributed to the metal’s enduring strength. In international markets, December gold futures reached an impressive USD 3,794.82 per ounce.
“Gold’s record high reflects the market’s anticipation of more interest rate cuts by the Federal Reserve this year,” explained Jigar Trivedi, Senior Research Analyst at Reliance Securities. Trivedi remarked that the Fed’s recent rate cut and possible further reductions are influencing investor behavior, leading them to expect nearly two more cuts this year given the softening labour market.
As traders await Fed Chair Jerome Powell’s upcoming comments on the economic outlook, the market anticipates more insights during this critical period. Friday’s release of the Personal Consumption Expenditures (PCE) price index, a key inflation guide for the Fed, may provide further direction regarding future monetary policy adjustments.
Additionally, investors remain concerned about geopolitical uncertainties, like the ongoing conflicts in Ukraine and the Middle East, which prop up demand for safe-haven assets like gold and prevent significant price corrections.
In summary, the surge in gold prices demonstrates both local investor confidence and international economic conditions. As the market navigates these challenges, the ongoing rise in bullion prices may continue if the Fed’s policies support further easing.
