Why Gold Prices Are Scaling All-Time Highs Now?

Gold prices in the international market on Wednesday hit a fresh all-time high amid the Israel-Lebanon conflict, a weaker dollar and a decline in US bond yields. In India, the yellow metal touched a record Rs 76,000 per 10 grams. In the international market, gold prices approached the $2,700-an-ounce level to hit $2,690.

“Gold witnessed an impressive rally on Tuesday, breaking another record high, and Silver wasn’t far behind, hitting its best level in nine weeks. People are rushing to these safe-haven metals as uncertainty continues to hang around. The charts also look bullish, which is why the speculators are jumping in. China also gave the metals a bit of a boost by cutting its key bank rate by 0.5%, which provided a major boost to gold and silver,” Rahul Kalantri, vice-president (commodities), Mehta Equities Ltd.

He added that the Israel-Hezbollah military conflict is heating up rapidly, thus fuelling a safe-haven buying in gold and silver.

Kaynat Chainwala, assistant vice-president (commodity research), Kotak Securities, said, “COMEX gold surged to $2,689.40 per ounce yesterday as a significant drop in US consumer confidence heightened expectations for aggressive interest rate cuts by the Federal Reserve. The US Conference Board’s Consumer Confidence Index fell sharply in September to 98.7, down from 105.6 in August, its largest decline in three years. Concerns over the labor market, combined with lower US Treasury yields and the US dollar nearing a 14-month low, further fueled the rise in gold prices. Additionally, Fed Governor Michelle Bowman highlighted persistent inflation risks and advocated for a cautious approach to rate cuts to avoid reigniting inflation.”

Today, COMEX gold prices reached a record high of $2,694.89 per ounce, and expected to hold gains as the CME FedWatch Tool now indicates a 62.2% chance of a 50 basis point cut in November, up from just 29% a week ago. Ongoing fears of an escalating Israel-Hezbollah conflict are likely to enhance gold’s appeal as a safe-haven asset.” Chainwala added.

ICICI Securities in its note said, “Spot gold prices hit fresh highs amid weakness in the dollar and a decline in US bond yields. Weaker than expected US CB consumer confidence numbers has increased the bets of another 50 bps interest rate cut in November. Further, latest measures form China to support the economy also pushed silver prices higher. Moreover dovish comments from BOJ Governor Ueda has strengthened the bullions as he emphasized to hold rates steady.”

The dollar index remained under pressure amid weaker than expected economic numbers from US. CB consumer confidence hit its lowest since May 2024 to 98.70. Meanwhile, hawkish comments from Fed member Bowman limited its downside, the brokerage firm added.

Pranav Mer, vice-president, EBG (commodity & currency research) at JM Financial Services Ltd, said, “Gold’s bull run continues as prices hit yet another all-time high at 76000 per 10gm on futures and move close to $2700 per ounce overseas. Prices remain supported by a weaker dollar, expectation of more rate cuts from global central banks, safe haven demand, and inflow of ETF funds”.

On chart trend remains positive with support at 74,900/ 74,400. “However, trade cautiously, as we may see some profit-booking,” he added.

Silver Prices

“Silver prices surged past Rs 90,000 in the physical market, reaching Rs 90,324, as per IBJA rates, with Comex Silver surpassing $32, following a sharp rally of 4.25 per cent. In MCX, Silver prices rose by 3.45 per cent yesterday, taking prices above Rs 92,000,” said Jateen Trivedi, vice-president (research analyst- commodity and currency), LKP Securities.

This bullish movement comes amid strong expectations for further US interest rate cuts and China unveiling aggressive stimulus measures. China’s central bank announced its most substantial stimulus since the pandemic, while Fed’s Desk hinted at many more rate cuts over the next year. Traders now see a many more instance of another 50 bps cut by the Federal Reserve in November, further boosting precious metal prices, he added.