Gold prices surged to a record high of Rs 1,12,750 per 10 grams in the Indian futures market on Tuesday, bolstered by expectations of reduced interest rates by the US Federal Reserve. Safe-haven buying and global cues contributed significantly to this rally.
On the Multi Commodity Exchange (MCX), gold futures for October delivery increased by Rs 520, or 0.46 percent, to reach this all-time high. Similarly, the December contract rose Rs 530 to touch Rs 1,13,750, also marking another peak.
Silver prices followed suit, experiencing upward momentum as well. December silver futures appreciated Rs 461 to hit Rs 1,34,016 per kilogram. The price for March delivery next year reached Rs 1,35,397 per kg, also reflecting remarkable gains.
Experts attribute the ongoing bullish trend in gold and silver to a myriad of factors. The recent rate cut by the Federal Reserve, localized geopolitical tensions, and continued central bank purchases have collectively invigorated market sentiment.
Rahul Kalantri, Vice-President of Commodities at Mehta Equities Ltd, remarked, “The rally in gold and silver showed no signs of slowing, with both metals soaring to fresh records. The Fed’s recent actions and the overall market conditions played pivotal roles in driving prices upward.”
He emphasized that the 25 basis points interest rate cut by the Fed, coupled with expectations for further reductions by year-end, has stimulated demand. Additionally, a weakening dollar index and a softening rupee strengthened domestic bullion prices.
Kalantri noted that persistent institutional buying, along with inflows through Exchange-Traded Funds (ETFs), heightened safe-haven demand as geopolitical uncertainties loomed large.
Overseas, gold futures for December delivery also climbed to a striking peak of USD 3,794.82 per ounce. Jigar Trivedi, Senior Research Analyst at Reliance Securities, stated, “Gold hit a fresh record high, supported by hopes of more interest rate cuts from the Federal Reserve this year. The Fed’s initial rate cut last week has prompted markets to forecast additional easing, particularly as the labor market shows signs of weakening.”
The analyst added that traders are keenly anticipating statements from Fed Chair Jerome Powell concerning the economic outlook, scheduled for later today. Upcoming data, such as the Personal Consumption Expenditures price index—an inflation measure favored by the Fed—will also significantly influence market direction.
In the backdrop, geopolitical tensions, especially regarding the ongoing Russia-Ukraine war and conflicts in the Middle East, have contributed to heightened demand for safe-haven assets, solidifying precious metals’ valuations despite their record-high levels. With investor apprehensions persisting, bullion remains firmly supported in the market.
As investors closely monitor global economic signals, it remains to be seen how current market dynamics will unfold in the coming weeks, particularly as the Federal Reserve navigates its monetary policy amid evolving economic challenges.
