Gold futures are experiencing a significant rally, driven by global geopolitical uncertainties, a weaker US dollar, and the Reserve Bank of India's decision to hold its repo rate, impacting investment strategies and market sentiment.
Key Points
- Gold futures surged for the second straight session, with MCX October contract rising by Rs 2,165 to Rs 1,46,464 per 10 grams.
- The rally is attributed to increased safe-haven buying amidst geopolitical uncertainty and a weaker US dollar.
- The Reserve Bank of India maintained its benchmark repo rate at 5.25% for the fourth consecutive meeting, balancing growth support with inflation monitoring.
- International Comex gold futures also saw gains, rising to USD 4,226.50 per ounce.
- Optimism over the reopening of the Strait of Hormuz eased geopolitical tensions and lowered oil prices, contributing to reduced inflation concerns.
Gold futures climbed for the second straight session on Wednesday, rising by Rs 2,165 to Rs 1.46 lakh per 10 grams, tracking a sharp rally in overseas markets amid renewed demand for the precious metal.
On the Multi Commodity Exchange, the October contract of the metal jumped by Rs 2,165, or 1.5 per cent, to Rs 1,46,464 per 10 grams.
Factors Driving Gold's Ascent
"Gold extended their gains for the second straight session on Wednesday as investors increased safe-haven buying following renewed geopolitical uncertainty and a weaker US dollar," said Gaurav Garg, Head of Research at Lemonn Markets Desk.
The rally also coincided with the Reserve Bank of India's decision to keep its benchmark repo rate unchanged at 5.25 per cent for a fourth consecutive policy meeting, as policymakers sought greater clarity on the inflationary impact of higher energy prices.
Ajitabh Bharti, co-founder & executive director at CapitalXB said the RBI's current stance of keeping the policy rate on hold appears well balanced.
"While the ongoing US-Iran war continues to cast a shadow over the global inflation outlook, the RBI is likely to remain focused on supporting growth while monitoring inflation carefully," Bharti said.
Global Market Performance And Outlook
In the international markets, Comex gold futures for the December contract gained USD 73.90, or nearly 2 per cent, to USD 4,226.50 per ounce in New York.
"Bullion prices extended their rally, with Comex gold rising above USD 4,100 per ounce, driven by optimism over a potential agreement to reopen the Strait of Hormuz, which eased geopolitical tensions and pushed oil prices lower, reducing inflation concerns," Pinky Yadav, Commodity Fundamental Analyst at Choice Broking, said.
Garg said the softer crude prices have eased near-term inflation concerns, while investors remain focused on upcoming US macroeconomic data and central bank commentary for further direction in commodity markets.
