Gold prices hit record high in India: What's the reason?
What's the story
Gold prices have surged to a new peak of ₹1,06,199 per 10g in the domestic futures market. The increase is largely attributed to expectations of a US Federal Reserve rate cut this month, with a stable dollar as a contributing factor. The rise comes as international gold prices also hit record highs, with US gold futures climbing to $3,616.70 per troy ounce.
Rate cut expectations
Fed rate cut expectations
The US Federal Reserve is expected to announce its policy decision on September 17. According to Reuters, CME Group's FedWatch tool shows that the market is pricing in a 92% chance of a 25-basis-point rate cut this month. The anticipation of lower interest rates has been a major driver behind the recent surge in gold prices.
Tariff impact
US tariffs on Indian goods add to gold price pressure
Along with Fed rate cut hopes, the ongoing concerns over US tariffs on Indian goods have also been a major factor supporting gold prices. A Bloomberg report quoted US President Donald Trump as saying he is not considering lowering tariffs on India anytime soon. Market participants fear that prolonged high US tariffs could hurt the Indian economy significantly, leading to an increase in gold prices amid economic uncertainty.
Market trends
Gold's safe-haven demand continues
Aksha Kamboj, Vice President of the India Bullion and Jewellers Association (IBJA), said that gold has continued its bullish run due to continued safe-haven demand. This comes amid fears over Trump's tariffs and global economic uncertainties. The world's largest gold-backed exchange-traded fund, SPDR Gold Trust, saw a 1.32% increase in holdings to 990.56 tons on Tuesday, the highest since August 2022.
Market forecast
Gold, silver price levels to watch today
Manoj Kumar Jain of Prithvi Finmart Commodity Research has predicted support for gold at $3,570-$3,552 and resistance at $3,620-$3,640 per troy ounce. He also forecasts support for silver at $41.20-$40.84 and resistance at $41.94-$42.40 per troy ounce in today's session.