Gold prices record all-time high amid global tensions and Fed rate cut speculation

NEW DELHI: India saw a historic surge in gold prices on Thursday, with the Multi Commodity Exchange (MCX) recording a new all-time high of Rs 76,899 per 10 grams.
Earlier in the day, spot gold had increased by 0.6 per cent to $2,689.86 per ounce, while US gold futures rose by 0.5 per cent to $2,705.30.
Gold prices boosted in India
According to market analysts, the remarkable surge in gold prices can be attributed to a combination of various factors.These include the dovish stances adopted by major central banks, a slight decrease in bond yields, and escalating geopolitical tensions across the globe.
Director of Kedia Advisory, Ajay Kedia shed light on the key drivers behind this historic rise in gold prices in an exclusive interview with ANI.
He said, “MCX Gold reached an all-time high of Rs 76,899 as major central banks’ dovish outlooks and slightly lower bond yields boosted demand for non-interest-bearing bullion.”
“The Federal Reserve is expected to cut rates in its two remaining decisions this year, with a 25-basis-point cut in November looking increasingly likely,” he added.
He further continued that, “Gold prices were also boosted by uncertainty surrounding the US presidential election and renewed Middle Eastern tensions, following Israel’s intensified air strikes on Lebanon on Wednesday.”
Gold prices hit record high in US
Gold prices hit all-time highs globally as investors sought refuge in the safe-haven asset amid uncertainty surrounding the US presidential election and the ongoing conflict in the Middle East. The accommodative monetary policy environment further contributed to the elevated prices.
AVP-Commodity Research at Kotak Securities, Kaynat Chainwala added to the analysis, noting that global gold prices were also on the rise.
He said, “Comex gold prices surged, bolstered by falling US Treasury yields and strong safe-haven demand amid escalating geopolitical tensions. However, prices pulled back from higher levels due to a stronger dollar. Despite this, safe-haven bids stemming from heightened tensions in the Middle East, particularly following Israel’s strikes on Hezbollah in Lebanon, helped limit the decline, allowing COMEX gold to close 0.5% higher at $2,691.30 per ounce.”
“US Retail sales and jobless figures are being closely watched for insights into the pace of Federal Reserve easing this year. So far, signs of resilience in the US economy have led to speculation that the Federal Reserve may adopt a less aggressive approach to rate cuts,” he added.
This year, gold has experienced a remarkable surge of over 30%, surpassing previous record levels. The driving factors behind this increase include the anticipation of further Federal Reserve rate cuts following a half percentage point rate cut last month and persistent geopolitical uncertainties.
Earlier this week, delegates at the London Bullion Market Association’s annual gathering forecasted that gold prices would climb to $2,941 per troy ounce over the next 12 months.