Gold prices soared to a historic high of Rs 1,12,750 per 10 grams on Tuesday, reflecting a bullish global trend amid rising expectations of further rate cuts by the US Federal Reserve. The rally demonstrates significant safe-haven buying as investors react to shifting monetary policy and geopolitical tensions.
On the Multi Commodity Exchange (MCX), the gold futures contract for October delivery jumped by Rs 520, or 0.46%, reaching this unprecedented level. Similarly, the December contract rose Rs 530, also hitting a record of Rs 1,13,750 per 10 grams.
Alongside gold, silver prices continued their climb, with December futures advancing Rs 461, or 0.34%, to a new high of Rs 1,34,016 per kilogram. March silver futures also surged, increasing Rs 508, or 0.37%, to reach Rs 1,35,397 per kilogram.
Market analysts attribute this relentless rally in bullion to several contributory factors. These include the recent rate cut by the US Federal Reserve, which marked the first reduction of the year, and expectations for additional cuts in the near future. Furthermore, growing tensions globally have resulted in heightened safe-haven demand for precious metals.
“The rally in gold and silver shows no signs of slowing,” stated Rahul Kalantri, Vice-President of Commodities at Mehta Equities Ltd. According to him, both metals have reached fresh records, underscoring a bullish sentiment in the market.
Kalantri emphasized that the Fed’s decision to cut interest rates by 25 basis points and a weakened dollar index have played critical roles in boosting sentiment. A depreciated rupee further fuels domestic bullion prices, leading to significant interest in these metals.
“Persistent central bank purchases and strong inflows into exchange-traded funds added to the upward momentum,” Kalantri noted. Traders point to safe-haven buying as another critical aspect driving the strength of gold and silver.
In the international market, gold futures for December delivery surged to an all-time high of USD 3,794.82 per ounce. The global environment, shaped by geopolitical uncertainties, significantly impacts prices.
Senior Research Analyst Jigar Trivedi at Reliance Securities stated, “Gold achieved a fresh record high, bolstered by expectations of further interest rate cuts this year.” The recent rate cut reflects the Fed’s response to weakening labour market conditions, leading market participants to anticipate more reductions.
Trivedi highlighted that traders are poised for insights from Fed Chair Jerome Powell later today regarding the economic outlook. Additionally, the upcoming release of the Personal Consumption Expenditures price index, which is closely monitored by the Federal Reserve, will provide further clarity on the future trajectory of monetary policy.
Also impacting the market is the acute geopolitical landscape. Ongoing risks resulting from the Russia-Ukraine conflict and tensions in the Middle East are pushing more investors towards safe-haven assets. Despite gold and silver reaching elevated levels, these dynamics prevent any sharp corrections in the bullion price.
Overall, investors remain cautiously optimistic as they keep a close eye on market developments. The current trends in gold and silver are likely to steer investor sentiment in the coming weeks, with highs and lows driven by global cues and domestic economic indicators.
