Gold prices in India and globally have scaled unprecedented peaks, driven by a potent mix of monetary policy expectations and its enduring safe-haven appeal. The rally has not only pushed gold to fresh records but has been spectacularly outpaced by silver, which posted massive single-day gains.
The Global Catalyst: Fed Policy and Economic Data
The primary engine for the latest surge is the growing anticipation of more interest rate cuts by the US Federal Reserve. Fresh economic data from the US, pointing to continued weakness in the labour market and easing inflation, has solidified market bets on further monetary easing. Last week, the Fed delivered a quarter-point rate cut, fuelling hopes of more to come.
This scenario is profoundly bullish for non-yielding assets like gold. Investors are now pricing in two potential rate cuts in 2026. The spot gold price internationally surged to a record $4,383.73 per ounce, surpassing the previous high of $4,381.52 set in October. For the year, the precious metal has gained an impressive 67%.
Domestic Markets Mirror Global Frenzy
The global momentum has powerfully resonated in Indian markets. MCX gold futures climbed Rs 574, or 0.43%, to hit an all-time high of Rs 1,35,590 per 10 grams last Thursday. This marked the fourth consecutive weekly gain and puts gold on course for its twelfth straight monthly rise.
Prathamesh Mallya, an analyst at Angel One, explained the rally: "Weak dollar, dovish Federal Reserve, and lower inflation data in the US triggered the momentum in gold prices in the recent week." A softer dollar index makes gold cheaper for holders of other currencies, adding another layer of support.
Silver Steals the Show with Spectacular Gains
While gold has posted strong gains, silver has dramatically outperformed. Last Friday, silver prices on domestic exchanges surged a staggering 8.08%, touching a record high of Rs 2,08,603 per kilogram. The white metal has climbed more than 130% this year, supported by strong exchange-traded fund inflows and market concerns around yen carry trades amid expectations of a rate hike by the Bank of Japan.
Outlook and Expert Views
Market experts remain optimistic about both metals but caution about potential near-term corrections. Analyst Pranav Mer maintained a positive view on gold, expecting prices to rise further to Rs 1,40,000-1,45,000 per 10 grams by early next year, with a key support level placed at Rs 1,29,000. On silver, he noted that while further upside is possible, the risk-reward balance is currently stretched.
The broader rally in 2024 has been driven by multiple factors:
- Persistent geopolitical and trade tensions.
- Strong, consistent buying by central banks worldwide.
- Sustained expectations of lower global interest rates.
As the financial landscape evolves with shifting central bank policies, gold and silver continue to reinforce their status as critical assets for investors seeking stability and growth.
