CHENNAI: Gold prices extended their record-breaking rally on Tuesday morning, climbing to fresh all-time highs as global investors sought safety amid economic and policy uncertainties.
On the Multi Commodity Exchange (MCX), December futures were trading close to Rs 1,17,700 per 10 grams, marking a new peak after a sharp rise of over 1 percent earlier in the day. In global markets, spot gold touched about $3,867 per ounce, its highest level ever, supported by expectations of US monetary easing and heightened risk aversion.
Key drivers of the gold price rally included:
Safe-haven demand: Concerns over a possible US government shutdown, fragile Chinese factory activity, and volatile equity markets have boosted gold’s appeal as a hedge.
Rate cut bets: Futures markets are pricing in likely U.S. Federal Reserve rate cuts in the coming months, lowering the opportunity cost of holding non-yielding assets like gold.
Rupee weakness: The Indian rupee remains near record lows, making imported gold costlier and further lifting domestic prices.
Gold’s sharp rise has been backed by strong volumes, confirming the momentum of the rally. Technical analysts note that the breakout above Rs 1,17,000 on MCX signals continuation of the bullish trend, with immediate resistance now shifting higher to around Rs 1,18,200.
On the daily chart, RSI readings are in the overbought zone (above 70), reflecting strong bullish sentiment but also hinting at the risk of near-term consolidation.
The yellow metal is trading well above its 50-day and 200-day moving averages, underlining long-term bullishness. The steep gap between current prices and these averages, however, indicates an overextended trend.
On MCX, the first support lies near Rs 1,16,800, followed by stronger support around Rs 1,15,900. A sustained break below these levels could trigger profit-taking.
Silver follows suit
Silver futures also moved higher, mirroring gold’s strength. Contracts on MCX advanced toward Rs 1,47,000 per kg, reflecting broad-based interest in precious metals amid safe-haven demand.
Market expectation
With record highs in place, gold’s trajectory remains upward in the medium term, supported by macroeconomic uncertainties, expectations of easier monetary policy, and currency weakness. However, traders caution that the sharp run-up has increased the risk of short-term pullbacks. A clearer picture will emerge once US fiscal and monetary policy developments unfold.