Gold futures surge over 2%, hit lifetime high; silver prices soar over 2.5%

Gold futures for October delivery hit a fresh all-time high of ₹1,05,937 per 10 gram on Monday, September 1, surging by as much as ₹2,113 (2.03%) on the back of bullish sentiment in the international markets. 

The yellow metal futures also touched their previous peak in the previous session on Friday, trading at ₹1,04,090 per 10 gram on the Multi-Commodity Exchange (MCX). 

Gold futures for the December contract soared 1.6% (1,682) to touch a record high of ₹1,06,539 per 10 grams on the MCX. 

Globally, Comex gold futures for December delivery rallied to their lifetime high of $3,552.32 per ounce in New York.

As per market experts, gold touched its all-time highs in both domestic and international markets, driven by tariff concerns. Gold, as a safe-haven metal, rises during geopolitical tensions and market volatility. The current tariff situation is fuelling the precious metal, along with the expected interest rate cut by the US Federal Reserve this month. 

The Fed Chair Jerome Powell recently suggested that an interest rate cut is possible in the upcoming September meeting. This can be crucial for gold’s trajectory in the coming weeks. 

"Gold marked an all-time high on Comex as well as on the domestic front amid the tariff escalations, which are continuously supporting buying in bullion," a PTI report quoted Manav Modi, Analyst, Precious Metal—Research, Motilal Oswal Financial Services, as saying. 

Additionally, traders are expecting an interest rate cut by the US Federal Reserve this month, which lifted bullion's allure, Modi added.

Modi further stated that an increase in festive and wedding demand, ETF buying and increased buying by the Chinese central bank are some of the additional factors supporting gold's bull run.

Domestic gold prices climbed ₹2,100 to an all-time high of ₹1,03,670 per 10 gram on Friday, August 29, in the national capital. The upside momentum in yellow metal prices has been going on for over four consecutive sessions now. During the previous week, gold prices rose by ₹3,300 (3.29%). 

Major factors driving gold demand

• Market volatility and geopolitics: Fluctuations in the stock market, along with geopolitical tensions, aid gold’s bull run as its safe haven demand rises. When other investments turn risky, traders and investors shift to gold and rely on its risk premium for returns.
• Currency: In the overseas markets, a weaker dollar usually translates to higher gold prices. Similarly, depreciation of the Indian rupee strengthens gold in India. As mentioned earlier, when investments like currencies tumble, gold soars.
• Festive season: As gold is not limited to just being an investment tool in India, the demand for the yellow metal rises during the festive season in the country. Gold’s cultural and traditional significance boosts its demand and rates.
• Economic indicators: In the overseas markets, US economic data has a significant impact on gold prices. Investors will be keenly awaiting upcoming US employment data, purchasing managers' index (PMI) readings from major economies and speeches of several Federal Reserve officials, to gauge the yellow metal’s trajectory.

"In the week ahead, focus will be on the manufacturing/services PMI data from across regions and the US employment data. Festive demand in India and uncertainty over the Russia-Ukraine peace deal, as well as straining India-US relations, will also drive market sentiment," another PTI report quoted Pranav Mer, Vice President, EBG—Commodity & Currency Research, JM Financial Services, as saying. 

Market analysts also suggest looking out for heightened volatility in gold. “While the overall outlook remains constructive on expectations of monetary policy easing and robust festive demand in India, near-term corrections cannot be ruled out,” the PTI report noted. 

Silver rates

On Monday, September 1, Silver futures for the September delivery jumped 2.5% (₹2,597) to ₹1,24,990 per kg in the early trade. Since last week, silver futures have been soaring to fresh all-time highs fueled by tariff tensions. 

In the overseas markets on Monday, Comex silver futures for the December contract surpassed $41 per ounce, its highest level in 14 years, in New York. 

As per experts, the weakening US dollar, trade tensions, US economic data and market volatility, among other things, are impacting silver rates both in India and globally.  

Silver rates in India, however, retreated from their all-time high level on Friday, declining by ₹1,000 to ₹1,19,000 per kg in Delhi.