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Gold Rush: Prices soar to record highs in India, fuelled by global cues and rate cut speculation

Gold prices in India hit a record high of ₹65,000 per 10 grams, fueled by global uncertainties, speculation of US Fed rate cuts, and rising demand for the safe-haven asset.

Gold Rush: Prices soar to record highs in India, fuelled by global cues and rate cut speculation

Gold prices in India witnessed a record-breaking surge on Tuesday, reaching a staggering ₹65,000 per 10 grams in the national capital. This marks a significant jump of ₹800 compared to the previous closing price of ₹64,200 per 10 grams. The precious metal's upward trajectory wasn't limited to Delhi, with major cities like Mumbai and Kolkata also experiencing a price hike, with 24K gold reaching ₹64,850 per 10 grams, according to Goodreturns. Chennai saw an even steeper rise, with the price touching ₹65,620 per 10 grams.

 

This surge wasn't an isolated event, as silver prices also saw a notable increase, rising by ₹900 to ₹74,900 per kg compared to ₹74,000 per kg the previous day.

 

 

What's driving the gold rush?

Market experts attribute this phenomenal rise to several key factors:

  • Global Cues: Various global economic uncertainties have contributed to a steady rise in international gold prices. The ongoing war in Ukraine, coupled with rising inflation and concerns over a potential recession, has fueled investor appetite for safe-haven assets like gold.
  • Speculation on US Fed Rate Cuts: Recent speculations surrounding the possibility of the US Federal Reserve cutting interest rates in June have further bolstered gold's appeal. According to Jateen Trivedi, VP Research Analyst at LKP Securities, "Gold prices experienced an uptick driven by growing speculation that the US Federal Reserve will cut interest rates in June; thus,  a gain of more than ₹2,400 was seen in MCX in the last three days." Lower interest rates can make gold, which doesn't offer any regular income, a more attractive investment compared to interest-bearing instruments like bonds.

 

Experts' Insights:

Saumil Gandhi, a senior analyst of commodities at HDFC Securities, highlighted the influence of international markets on domestic prices, stating, "Spot gold prices (24 carats) in the Delhi markets are trading at ₹65,000 per 10 grams, up by ₹800, taking bullish cues from the overseas markets."

 

 

While the current surge has been significant, the future trajectory of gold prices remains uncertain. The actual decision of the US Federal Reserve regarding interest rates and the overall global economic climate will play a crucial role in determining the future course of gold prices in India and around the world.

 

 

 


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