Gold prices in India hit record high—What's driving the surge?
What's the story
Gold prices in India have hit a new all-time high of ₹80,979 per 10gm in futures trade.
The increase is fueled by fresh positions taken by speculators amid strong demand from users.
April delivery gold contracts on the Multi Commodity Exchange (MCX) saw a business turnover of 13,257 lots.
Despite a slight 0.11% dip in global gold futures to $2,760.41 per ounce in New York, gold prices in India surged.
Market factors
Speculative trading and weaker rupee boost gold prices
Analysts blame speculative trading and weaker rupee for the domestic price hike.
Renisha Chainani, Head of Research at Augmont, noted that worries over tariffs, economic deficits, and de-dollarization are partly responsible for gold's rise.
She also stressed the continued focus on the US Federal Reserve's policy meeting where it is expected to hold interest rates steady.
The CME FedWatch tool indicates a 40% chance of a 25-basis point rate cut in May while 51.5% traders expect no change in rates.
Policy impact
Trump's calls for rate cuts add market uncertainty
US President Donald Trump's repeated calls for rate cuts have added another layer of uncertainty to the markets.
His remarks on reducing borrowing costs globally are complicating the Fed's job, further impacting the financial landscape and driving demand for safe-haven assets like gold.
Prathamesh Mallya, DVP-Research at Angel One Ltd, noted gold prices surged over 2% last week as market participants sought refuge in safe-haven assets amidst concerns about rate cuts and tariff ambiguity.
Market outlook
Gold's appeal likely to rise amid global uncertainties
As the US Federal Reserve gears up to conclude its meeting, the market's expectation of stable rates could lend further support to gold prices.
Additionally, global uncertainties fueled by Trump's policy statements are expected to continue enhancing the appeal of gold.
Gold's consistent rise in the last few days indicates a positive outlook, aided by external factors like geopolitical uncertainties, fluctuating tariffs and US monetary policy.