Gold Rate Today: Key Reasons for the Price Surge Explained
An in-depth explanation of why gold prices have reached a new all-time high, driven by a combination of a weaker U.S. dollar, market anticipation of a U.S. Federal Reserve interest rate cut, and increased demand for safe-haven assets amidst global geopolitical uncertainty.
Gold prices have hit a new record high in the domestic and international markets, driven by global economic factors.
The price of 10 grams of gold in the domestic futures market surged to ₹1,10,312 today, setting a new all-time high that has once again made headlines. A number of global economic factors have contributed to the most recent surge, which saw a jump of ₹723, and have made the precious metal an alluring safe-haven asset for investors.
Principal Forces Behind the Rally:
1. Fed Rate Cut Hopes and Weak U.S. Economic Data:
The rising anticipation of interest rate cuts by the US Federal Reserve is a major factor in the gold rally. Market wagers on aggressive monetary easing have been strengthened by recent weak U.S. employment data, which showed non-farm payrolls increasing by only 22,000 against an estimated 75,000. Generally speaking, non-yielding assets like gold are more attractive than interest-bearing securities when interest rates are lower.
2. A Weaker U.S. Dollar:
Compared to a basket of major currencies, the U.S. dollar has been declining and has reached its lowest point since late July. Because gold is valued in US dollars, buyers with other currencies can purchase the commodity for less money, increasing demand and driving up prices.
3. Global Geopolitical Tensions and Uncertainty:
The demand for safe-haven assets has surged due to ongoing global macroeconomic and geopolitical uncertainty, which includes the possibility of further U.S. sanctions on Russia and its retaliatory strikes. The main beneficiary of this trend is gold, which has historically served as a store of value during turbulent times.
4. Trump's New Tariff Exemptions:
Another element blamed for the price increase is the recent executive order signed by US President Donald Trump that exempts gold from tariffs on a number of industrial exports.
Despite recent declines, gold is still rising and is still a highly sought-after safe-haven asset in the current global environment, according to Aksha Kamboj, vice president of the India Bullion & Jewellers Association. Strong investor interest and global central bank demand continuously sustain the value of the precious metal.
