Gold prices soared to a historic peak of Rs 1,12,750 per 10 grams on Tuesday, driven by expectations of additional rate cuts from the US Federal Reserve. The rally reflects both domestic demand and global trends, significantly impacting the Indian bullion market.
On the Multi Commodity Exchange (MCX), gold futures for October delivery increased by Rs 520, or 0.46%, reaching this unprecedented high. The December contract also saw gains, climbing Rs 530 to Rs 1,13,750 per 10 grams.
Silver prices followed suit, achieving their own record highs. December-delivery silver futures appreciated Rs 461, or 0.34%, to hit Rs 1,34,016 per kilogram. March 2024 delivery silver rose to Rs 1,35,397 per kg.
Analysts attribute this bullish trend in gold and silver to a multitude of factors. The first rate cut of 2023 from the US Federal Reserve, along with the potential for further easing, has boosted market sentiment. Heightened demand for safe-haven assets during times of geopolitical uncertainty also supports the substantial rally.
“The rally in gold and silver shows no signs of slowing, as prices hit new records,” stated Rahul Kalantri, Vice-President of Commodities at Mehta Equities Ltd. He emphasized the importance of the Fed’s 25 basis points interest rate cut, which heightened optimism, alongside a weaker dollar index that further buoyed domestic precious metal prices.
Moreover, the ongoing strength of bullion arises from consistent purchases by central banks and substantial inflows into exchange-traded funds (ETFs). Kalantri noted that persistent demand for safe-haven investments enhances the overall value of these precious metals.
Internationally, gold futures for December delivery reached a staggering peak of USD 3,794.82 per ounce. Jigar Trivedi, Senior Research Analyst at Reliance Securities, explained that the record high is partly due to expectations of more interest rate cuts from the Fed. He highlighted that following last week’s cut, market participants anticipate two additional reductions of 25 basis points before the end of the year.
As market dynamics shift, traders eagerly await comments from Fed Chair Jerome Powell regarding the economic outlook, along with important economic indicators such as the Personal Consumption Expenditures price index to be released on Friday. These elements will likely guide the Fed’s future monetary policy.
Geopolitical tensions, particularly the ongoing Russia-Ukraine conflict and hurdles in the Middle East, continue to drive investors toward safe-haven assets like gold and silver. Despite climbing prices, these conflicts maintain a level of volatility in the markets, preventing significant downturns.
In summary, the rising trend of gold prices to an all-time high of Rs 1,12,750 per 10 grams is underscored by economic policies from the US Federal Reserve and international uncertainties. The intrinsic value of gold as a safe investment remains pronounced in today’s financial landscape. (PTI)
