Gold prices reached a record high on Tuesday, setting the stage for the largest monthly surge in 14 years amid concerns over a potential US government shutdown and rising expectations for additional Federal Reserve rate cuts.
So far in September, the yellow metal has gained 11.4 per cent, positioning it for its best month since August 2011, when prices rose 15 per cent due to strong safe-haven demand.
Meanwhile, 24-carat gold (10 gram) climbed to a new high of Rs 1,15,450 on Tuesday, according to data from the India Bullion and Jewellers Association (IBJA).
US gold futures for December delivery increased 0.4 per cent to $3,872. A White House meeting aimed at preventing a government shutdown showed little progress between US President Donald Trump and his Democratic opponents, raising concerns over potential disruptions to federal services starting Wednesday.
In the event of a partial shutdown, the US Labour Department announced it would halt economic data releases, including the September jobs report.
Recent economic indicators have strengthened expectations for further easing by the Federal Reserve.
Traders currently assign an 89 per cent probability to a 25-basis-point cut at the upcoming Federal Reserve meeting, according to CME Group’s FedWatch tool.
St. Louis Federal Reserve President Alberto Musalem noted he is open to additional rate cuts but emphasized the need for caution and maintaining rates high enough to combat inflation.
Gold has continued to outperform Indian equities for the fourth consecutive Diwali-to-Diwali cycle, extending a trend where the yellow metal has outperformed equities in seven of the last eight years.
Silver also surpassed Indian equities for the third straight year, fueled by industrial demand from solar panel production, semiconductors, and electric vehicles.
Analysts point out that bullion remains supported by strong central bank purchases and sustained inflows into ETFs. At the same time, the Fed Chair’s cautious remarks on inflation, the labour market, and future rate cuts may cap gains.
Investors are now watching upcoming US data on job openings, private payrolls, the ISM manufacturing index, and Friday’s non-farm payrolls report to gauge the economy’s direction.
–IANS
