Gold prices have reached a new historic high, with the February futures contract on the Multi Commodity Exchange (MCX) touching a fresh record high of ₹1,35,263 per 10 grams. This marks a 75% year-to-date rally, putting gold on track for its biggest annual gain since 1979.
By 8:30 PM IST, MCX gold was trading ₹2,684, or 2.03%, higher at ₹1,35,153 per 10 grams. The spot gold price also edged higher, rising 1.35% to $4,346 per ounce, marking a seven-week high and just 0.80% below the record high of $4,381.
Silver prices touched a record high of ₹2,01,615 per kilo on MCX, crossing ₹2 lakh for the first time and taking its year-to-date rally to 130%, nearly double the gain of gold.
The US dollar index, which measures the currency against six major peers, hovered near two-month lows around 98.3 on Friday and was on track for a third consecutive weekly drop. The index is down more than 9% this year, on pace for its steepest annual decline since 2017.
The ongoing rally in gold and silver prices is driven by a sustained drop in the US Dollar index, weighed down by the prospect of rate cuts next year. The Federal Reserve cut rates as expected this week, but comments from Fed Chair Jerome Powell and the accompanying statement were seen by investors as less hawkish than anticipated, reinforcing dollar-selling momentum.
Additionally, the US jobless claims rose by the most in nearly 4 1/2 years last week, reversing the sharp drop seen in the previous week. This has amplified concerns about faster dollar debasement, leading to strong gains in gold and silver.
Analysts predict that the ongoing rally could push gold prices to ₹1.50 lakh and silver prices to ₹2,20,000 per kilo. Anindya Banerjee, Head of Currency and Commodity at Kotak Securities, said that the initial pace of around $40 billion in T-bill purchases starting mid-December is being viewed by markets as a form of quasi-Quantitative Easing.
Banerjee further said that silver is also benefiting from a notable physical squeeze, with Asian buyers aggressively demanding physical delivery while Western sellers are finding it increasingly difficult to meet their derivative‐linked obligations.
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