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Gold prices surged to a new high both in the international and domestic markets on the back of growing concern over geopolitical instability and the US Fed cutting key lending rates.
Following the firm trend in the US, gold prices on MCX for October delivery touched a new high of ₹74,637 per 10 gm. In the US, Commex gold touched a fresh high of $2660 an ounce.
Gold prices in the spot market jumped to ₹74,764 per 10 gm against ₹74,467 on Monday. In fact, in last one month, the yellow metal had rallied by ₹3,165 per 10 gm from ₹71,599 logged on August 22.
Driving factors
Market experts believe that further interest rate cuts by the US Fed and escalation of geopolitical tensions between Israel and Lebanon can push gold price to $3,000 in the medium to long-term.
Sandip Raichura, Director, PL Broking and Distribution, said though profit-taking may lead to a slight decline, the expectations of continued US Fed rate cuts over the next couple of quarters will weaken the US dollar and this should support gold prices.
Additionally, geopolitical tensions, particularly the crisis in the Middle East and the ongoing Russia-Ukraine conflict, are positively impacting gold, he added.
Jateen Trivedi, VP Research Analyst, LKP Securities, said gold prices to remain volatile in the international market on expectations of key data releases.
Ajay Kumar, Director, Kedia Stocks and Commodities, said the recent rise in gold has been largely driven by growing market bets that the US Fed will continue to lower interest rates in response to a weakening US labour market and a softening economy.
Traders remain cautious
Despite these factors, gold’s upward momentum has cooled slightly due to overbought conditions, prompting traders to remain cautious, he added.
Notwithstanding global economic concerns and US political uncertainty, the broader bullish sentiment for gold remains intact, though traders may await clearer signals before pushing prices higher, he said.
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