Gold prices surged to fresh all-time highs in the domestic and international markets on Tuesday, buoyed by speculation that the US Federal Reserve will begin cutting interest rates as early as next week.
Softer labour market data in the US has reinforced the likelihood of monetary easing, pushing investors towards the safe-haven metal. On the Multi Commodity Exchange (MCX), gold futures for October delivery advanced by Rs 982 or 0.9 per cent to touch a lifetime peak of Rs 1,09,500 per 10 grams.
Overall, gold prices jumped Rs 723 to settle at Rs 1,10,312 per 10 grams, reflecting the strong momentum in the bullion market, reported PTI.
Analysts attributed the surge to growing conviction that the Federal Reserve will lower interest rates, beginning with a 25 basis-point reduction at its policy meeting next week. “Gold hit a fresh all-time high, supported by mounting expectations of Federal Reserve interest rate cuts through year-end. Weak US jobs report last Friday led markets to price in three rate cuts this year,” noted Jigar Trivedi, Senior Research Analyst at Reliance Securities.
Global Markets Mirror the Rally
In the overseas market, Comex gold futures for December delivery soared to a record high of $3,698.02 per ounce. Spot gold also rallied to an unprecedented $3,658.38 per ounce. Renisha Chainani, Head of Research at Augmont, said: “Gold has reached new all-time highs above $3,695 per ounce to start the week on a strong bullish note. The action builds on last week’s surge as investors become more confident that the Fed would lower interest rates at its September monetary policy meeting.”
Meanwhile, the dollar index, which measures the US currency’s performance against six major peers, slipped 0.12 per cent to 97.33, further enhancing bullion’s appeal.
ETFs and Central Bank Purchases Add Momentum
The rally has also been supported by robust investment flows into gold-backed exchange-traded funds (ETFs). Global ETFs added 53 tonnes of gold in August, equivalent to about $5.5 billion, bringing assets under management closer to their pandemic-era peak. “The assets under management by ETFs closed at a month-end high once more, and it is currently only 6 per cent below the peak attained during the epidemic,” Chainani added.
At the same time, central banks continue to diversify reserves. The People’s Bank of China raised its gold holdings for the tenth consecutive month in August, signalling sustained appetite for the asset as a hedge against currency risk.
Geopolitical Concerns Provide Further Support
Experts noted that geopolitical tensions are also fuelling demand. The possibility of fresh US sanctions on Russia, following a retaliatory strike by Moscow on Ukraine, has strengthened gold’s role as a safe-haven investment. In addition, the Trump administration recently exempted gold and certain other metals from its tariffs, lending additional support to the market.
With US inflation data and producer price figures due later this week, traders are bracing for further signals on the Fed’s policy path. For now, gold continues to glitter as investors seek shelter from economic and geopolitical uncertainty.
