Gold Prices Surge to Record Rs 1,10,312 on Fed Rate Cut Speculations
New Delhi: Gold prices on Tuesday surged by Rs 723, hitting an all-time high of Rs 1,10,312 per 10 grams in the domestic futures market, driven by strong global cues and rising expectations of a US Federal Reserve interest rate cut next week.
Traders said weak US labour market data has strengthened the case for monetary easing, putting pressure on the dollar and boosting demand for the safe-haven metal.
The most traded gold futures for October delivery jumped Rs 982, or 0.9%, to a fresh peak of Rs 1,09,500 per 10 grams on the Multi Commodity Exchange (MCX).
“Gold hit a new all-time high, supported by growing expectations of Federal Reserve rate cuts through year-end. Last Friday’s weak US jobs report led markets to price in three rate cuts this year, including a 25 basis-point cut at the Fed’s policy meeting next week,” said Jigar Trivedi, Senior Research Analyst at Reliance Securities.
Investors are now looking ahead to the US Producer Price Index and Consumer Price Index data, due later this week, which could provide further clarity on the Fed’s next steps in its interest rate cycle, he added.
Meanwhile, the dollar index, which measures the greenback’s strength against a basket of six major currencies, was down 0.12% at 97.33.
In overseas markets, Comex gold futures for December delivery climbed to an all-time high of USD 3,698.02 per ounce, while spot gold reached USD 3,658.38 per ounce.
“Gold has started the week on a strong bullish note, reaching new all-time highs above USD 3,695 per ounce. This follows last week’s surge as investors grow more confident that the Fed will cut rates at its September meeting, a move now seen as almost certain after a series of weak US jobs data,” said Renisha Chainani, Head of Research at Augmont.
Globally, exchange-traded funds (ETFs) added 53 tonnes of gold in August, worth roughly USD 5.5 billion, pushing assets under management to a month-end high, just 6% below the peak reached during the pandemic.
“In August, the People’s Bank of China continued diversifying its reserves away from the US dollar, raising its gold holdings for the tenth consecutive month. Last week, the Trump administration exempted gold and certain other metals from country-based tariffs,” Chainani added.
Experts also noted that the possibility of further US sanctions against Russia, following Moscow’s retaliatory strike on Ukraine, has fueled safe-haven demand for gold.
