Gold Prices Surge ₹723 to Hit a Record High of ₹1,10,312/10 g on Fed Rate Cut Bets, Weak Dollar

Gold prices on Tuesday surged ₹723 to touch an all-time high of ₹1,10,312 per 10 grams in the domestic futures market, tracking strong global cues amid growing expectations of a US Federal Reserve interest rate cut next week.

Traders said weak US labour market data has strengthened the case for monetary policy easing, putting pressure on the dollar and boosting demand for the safe-haven asset.

On the MCX, the yellow metal futures for December delivery soared ₹723 or 0.65% to hit a fresh peak of ₹1,10,312 per 10 grams.

Also, the most traded gold futures for October delivery jumped ₹982 or 0.9% to hit a fresh peak of ₹1,09,500 per 10 grams on the Multi Commodity Exchange (MCX).

"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, including a 25 basis-point cut at the Fed's policy meeting next week," Jigar Trivedi, Senior Research Analyst at Reliance Securities, said.

Investors are now awaiting the US Producer Price Index and Consumer Price Index data, due later this week, which could provide further guidance on the Federal Reserve's (Fed) next steps for the interest rate cycle, Trivedi added.

Meanwhile, the dollar index, which gauges the greenback's strength against a basket of six currencies, was trading at 97.33, lower by 0.12%.

In the overseas markets, Comex gold futures for December delivery rose to hit an all-time high of USD 3,698.02 per ounce. Also, spot gold appreciated to hit a record high of USD 3,658.38 per ounce.

"Gold has reached new all-time highs above USD 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, a move that markets now regard as almost certain after a run of poor US job market data," said Renisha Chainani, Head - Research at Augmont.

Globally, the exchange-traded funds (ETFs) added 53 tonnes of gold in August, worth roughly USD 5.5 billion. The assets under management by ETFs closed at a month-end high once more, and it is currently only 6% below the peak that was attained during the epidemic, Chainani said.

"In August, the People's Bank of China continued to diversify its reserves away from the US dollar by increasing its gold holdings for the tenth consecutive month. Last week, the Trump administration took a step to exempt gold and some other metals from its country-based tariffs," she added.

According to the commodities market experts, the prospect of more US sanctions against Russia, following a retaliatory strike by Moscow against Ukraine, also fuelled the safe haven demand.