Gold Hits New Record Of $2,648 Per Ounce, Peaks To Fresh All-Time High On MCX

Gold prices, which have gained momentum following the US Federal Reserve's 50 basis points cut in interest rates last week, hit a new record in the global market on Tuesday.

Spot gold surged 0.75% to trade at $2,648.48 an ounce, surpassing the record of $2,634 per ounce clocked on Sept. 23.

The rates also touched a new high on India's Multi Commodity Exchange. The per 10 gram of the yellow metal was trading 0.46% up at Rs 74,492, which is higher than the record of Rs 74,216 touched on Sept. 23.

Meanwhile, the US gold futures on the Commodity Exchange or COMEX jumped 0.8% on Tuesday to peak to a new all-time high of $2,673.7 an ounce.

Since the Fed slashed benchmark lending rates on Sept. 18, spot gold has risen by around $85 an ounce, or 3.3%. In the same period, the metal's futures have gained by Rs 1,637 per 10 gram, or 2.25% on the MCX.

Dovish Fed Rhetoric

The fresh climb in gold prices came in the backdrop of Fed's dovish commentary on Monday, as policymakers indicated that more rate cuts could be on the way to sustain a balance in the economy.

There are "lots of cuts" to come over the next year's period, Chicago Fed Bank President Austan Goolsbee said, whereas Minneapolis Fed President Neel Kashkari said the economic data over the coming period would determine the future path of cuts.

"I am comfortable with a starting move like this - the 50 basis point cut in the federal funds rate announced last Wednesday - as a demarcation that we are back to thinking more about both sides of the mandate," Goolsbee said.

Notably, the Fed cheered the commodities and equity market with its decision to slash rate by 50 basis points, instead of 25 basis points, last week. According to CME FedWatch Tool, traders have factored in 75 basis points of cuts by 2024-end.

A lower interest rates augurs well for gold prices, as the demand for the safe-haven asset jumps when liquidity increases. Additionally, the rising tensions in the Middle East — where Israel's bombarding in Lebanon has killed over 500 persons including civilians — is expected to further push the metal's rates.