• Gold and silver hit fresh record highs on September 29, led by a softer US dollar and growing bets on Fed rate cuts.
• Pecious metals outperformed equities this year, with gold up 45 per cent and silver 62 per cent, while the Nifty 50 gained just under 4 per cent.
• Fed’s policy changes and inflation could weigh on gold; experts advise staggered exposure to manage potential pullbacks
Gold and Silver prices have touched their new all-time highs on September 29 amid a weakening US dollar, and rising bets on further rate cuts by the US Federal Reserve. The American central bank, during its last meeting on September 17, had cut rates by 25 basis points (bps).
The US dollar index, which measures the greenback against six major currencies, fell for the previous three consecutive sessions, losing over 0.60 per cent to quote at 97.62 today, as of 1:00 PM.
The CME FedWatch Tool shows market expects a 90 per cent chance of a rate cut in October and a 65 per cent chance of another cut in December.
Kaynat Chainwala, AVP- Commodity Research, Kotak Securities, told Outlook Money that "Gold’s upside has been well-supported by robust central bank buying, strong ETF inflows, and ongoing geopolitical uncertainty."
She added that the US Federal Reserve’s recent shift in monetary policy acted as a key catalyst for its latest leg higher.
Further, tariff hikes, the Russia-Ukraine conflict, tensions between the US and China, and several other factors such as central bank buying and a depreciating rupee in India have been further supporting Gold prices.
December gold futures on the Multi Commodity Exchange (MCX) climbed as much as 1 per cent to hit a new all-time high of Rs 1,16,050 per 10 grams. On COMEX, December Gold futures, too, touched a new record high. During the session so far, the contract surged as much as 0.99 per cent to $3,846.70 per ounce.
December Silver futures on MCX advanced up to 1.61 per cent to its record high of Rs 1,44,179 per 1 kg. On COMEX, December Silver futures jumped as much as 1.58 per cent to its lifetime high of $47.39 per ounce.
According to Investing.com, COMEX gold has rallied more than 45 per cent year-to-date (YTD), while silver has delivered even higher, 62 per cent, return. Meanwhile, the Nifty 50, which represents the combined performance of India’s 50 largest and most liquid stocks across sectors, has managed a modest gain of just 3.83 per cent over the same time frame.
As of now, tariff deal uncertainty with US, various geopolitical conflicts, continued foreign institutional investor (FII) selling amid high valuations are weighing on Indian equities. If these issues stabilise, the Nifty 50 could see a revival.
"The primary near-term risks to gold come from potential threats to the Fed’s easing trajectory. If U.S. inflation rises significantly or the labor market shows a sharp rebound, the Federal Reserve may hesitate to cut rates, which could weigh on gold prices,” Chainwala noted.
While gold looks promising over the long term, it’s prudent to stagger exposure and avoid overexposure to help investors maintain composure during potential pullbacks, she advised.