Gold prices experienced a notable increase on Tuesday, rising by ₹119 and reaching ₹1,10,298 per 10 grams in the domestic futures market. This surge brought the metal close to a record high, buoyed by favorable global trends as investors anticipated a potential interest rate cut from the US Federal Reserve later in the week.
On the Multi Commodity Exchange (MCX), the actively traded October gold futures not only gained ₹119, equating to a 0.10 percent increase, but also touched an all-time high of ₹1,10,330 in the previous session. Similarly, the December contract rose by ₹109 to hit ₹1,11,346 per 10 grams, mirroring a record peak of ₹1,11,350 per 10 grams reached on Monday.
Market analysts noted that the ongoing ascent in gold prices is largely attributed to traders’ expectations surrounding the Federal Reserve’s policy decisions, particularly the anticipated rate cut on September 17. This expectation has led to increased interest in gold as a safe-haven asset amidst global economic uncertainties.
On the international front, December gold futures soared to a record price of $3,728.32 per ounce. This increase is connected to projections of a more accommodating US monetary policy and persistent demand for safe-haven assets, particularly given the weakening dollar and declining US yields.
“The record peak in gold prices has been supported by a weaker dollar, which is currently trading near a 2.5-month low against the euro,” stated Manav Modi, an analyst specializing in precious metals at Motilal Oswal Financial Services Ltd. “As market participants await Governor Powell’s remarks during this week’s policy meeting, expectations are pointing to a 25 basis points rate cut after a prolonged pause. The upcoming statements, alongside the dot plot and economic forecasts, are also key factors to monitor.”
Investors are now assessing whether it is the right moment to buy or sell gold. Darshan Desai, CEO of Aspect Bullion & Refinery, suggests that opportunities to buy may arise if the bullion experiences any short-term dips. He indicated, “Gold prices are driven largely by the weakening dollar, which has seen a significant drop in recent weeks. While a smaller-than-expected rate cut or a hawkish stance from the Fed could be disappointing, any temporary decline in gold prices might provide an attractive entry point for long-term investors.”
Meanwhile, SimranJeet Singh Bhatia, a senior research analyst at Almondz Global, advocates for incorporating gold into investment portfolios, particularly in light of the expected rate cut, which he believes will further weaken the dollar. “Gold trading is closely tied to the value of the dollar; thus, a weaker dollar enhances gold’s appeal to investors using other currencies. The dollar currently stands at 97, down from a 52-week high of 117,” he mentioned.
As investors navigate these turbulent waters, the insights shared by notable analysts highlight the importance of monitoring economic developments and market trends in making informed decisions regarding gold investments.
