Gold prices soared to a record-breaking high of Rs 1,12,750 per 10 grams on Tuesday, driven by expectations of further rate cuts from the US Federal Reserve. Analysts attribute this rally to global economic trends and safe-haven demand ahead of Fed Chair Jerome Powell’s anticipated remarks.
On the Multi Commodity Exchange (MCX), gold futures for October delivery saw a jump of Rs 520, or 0.46%, which helped it reach this unprecedented high. Similarly, December contracts gained Rs 530, marking another record at Rs 1,13,750 per 10 grams.
Silver also enjoyed a significant upward trend, with prices for December futures increasing by Rs 461, reaching a new peak of Rs 1,34,016 per kilogram. For March delivery next year, silver prices rose by Rs 508 to touch Rs 1,35,397 per kilogram on the MCX.
Market analysts noted that multiple factors contributed to the bullish trend in gold and silver prices. The Fed’s initial rate cut of the year and speculation of additional cuts later in the year increased investor sentiment. Geopolitical tensions and sustained purchases by central banks also bolstered the appeal of precious metals as safe-haven assets.
“The ongoing rally in gold and silver appears unwavering, with both metals breaking new ground. Gold has hit lifetime highs while silver prices climb to their strongest levels in nearly 15 years,” stated Rahul Kalantri, Vice-President of Commodities at Mehta Equities Ltd.
Kalantri emphasized that the Fed’s recent decision to cut interest rates by 25 basis points, as well as a weakening dollar index and rupee, have bolstered domestic bullion prices. He added, “Persistent central bank purchases, along with strong inflows into ETFs and safe-haven buying, have fueled the strength of these precious metals.”
In international markets, gold futures for December delivery reached an astonishing USD 3,794.82 per ounce, driven by the prospect of more interest rate cuts from the Federal Reserve.
“Gold achieved this milestone supported by expectations of additional interest rate cuts throughout the year. The Fed’s recent cut and hints of further reductions have set the stage for bullish sentiment as concerns over a weakening labor market rise,” noted Jigar Trivedi, Senior Research Analyst at Reliance Securities.
Meanwhile, December silver futures saw a slight decrease, trading at USD 44.19 per ounce. Trivedi pointed out that traders await Fed Chair Jerome Powell’s insights on the economic outlook, along with upcoming economic data that could influence monetary policy.
Investors continue to be concerned about geopolitical risks, particularly stemming from the protracted Russia-Ukraine conflict and ongoing tensions in the Middle East. These factors have intensified demand for safe-haven assets like gold and silver, thus preventing significant corrections in prices despite their escalation.
This remarkable rise in precious metal prices not only highlights shifting market sentiments but showcases the demand for gold and silver amid fluctuating economic scenarios. As market participants brace for upcoming Fed announcements, one can expect further volatility in the bullion market.
