Gold soars past INR 1.18 lakh/10 g as rupee hits record low, global jitters fuel demand

NEW DELHI — Gold prices surged INR 2,700 to scale a new peak of INR 1,18,900 per 10 grams in the national capital amid sustained global demand for the safe-haven asset while rupee touching a new low facing the brunt of US H-1B visa fee hike.

According to the All India Sarafa Association, the yellow metal of 99.9 per cent purity had closed at INR 1,16,200 per 10 grams in the previous market session.

In the local bullion market, gold of 99.5 per cent purity rallied INR 2,650 to hit a record high of INR 1,18,300 per 10 grams (inclusive of all taxes). It had settled at INR 1,15,650 per 10 grams on Monday.

Traders said the rupee's steep fall against the US dollar added to the rally of the precious metal.

So far in this year, gold prices have added INR 39,950 per 10 grams, or 50.60 per cent, rallying from INR 78,950 per 10 grams on December 31, 2024.

Silver prices also skyrocketed by INR 3,220 to hit an all-time high of INR 1,39,600 per kilogram (inclusive of all taxes) on Tuesday. The white metal had ended at INR 1,36,380 per kg in the previous session.

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Silver prices have risen INR 49,900 per kilogram or 55.63 per cent in the current calendar year, skyrocketing from INR 89,700 per kg on December 31, 2024.

"In the Delhi markets, the spot gold price (24 carats) is trading at another record high from the previous close. A weaker rupee further bolsters the price of domestic bullion prices," said Saumil Gandhi, Senior Analyst - Commodities at HDFC Securities.

On Tuesday, the rupee depreciated 47 paise to hit an all-time low of 88.75 against the US dollar, amid sustained outflow of foreign funds on the back of a steep hike in US H-1B visa fee that is expected to give a big blow to Indian IT services exports.

In the international markets, spot gold rose more than 1 per cent to hit a record high of USD 3,791.10 per ounce.

"Spot gold surged to a fresh all-time high of USD 3,791 per ounce on Tuesday, driven by mounting expectations of more US rate cuts in 2025 and news that China is positioning itself as a custodian of foreign sovereign gold reserves," Kaynat Chainwala, AVP Commodity Research, Kotak Securities, said.

Chainwala further stated that momentum in precious metal prices was already building from Friday, when exchange-traded funds added 8.61 lakh troy ounces of gold to holdings, the biggest one-day inflow since January 2022.

SPDR Gold Trust reported a 0.60 per cent increase in holdings to 1,000.57 tonnes, the highest level in over three years, reinforcing bullish sentiment.

Renisha Chainani, Head - Research at Augmont said: "Gold prices touch a new record high driven by expectations that the US Federal Reserve (Fed) may lower interest rates further this year."

Last week, the Fed announced its first rate cut of the year and hinted that more to come as the labour market deteriorates. As a result, markets priced in nearly two additional 25 basis point cuts at the central bank's remaining meetings this year, Chainani said.

"Strong central bank purchases, consistent ETF inflows, and persistent geopolitical risks such as the Russia-Ukraine conflict and the economic consequences of President Donald Trump's tariffs, have also supported safe-haven flows," she added.

Spot silver was trading 0.57 per cent higher at USD 44.32 per ounce.

"Silver hovered above USD 44 per ounce as several Fed officials urged caution on further rate cuts, citing signs of stabilising inflation, while new governor Stephen Miran warned the central bank was misjudging policy tightness and risking the labour market without deeper easing," said Jigar Trivedi, Senior Research Analyst at Reliance Securities.

According to Praveen Singh, Head of commodities and currencies at Mirae Asset ShareKhan, the Fed Chair Jerome Powell's speech and US PMI numbers will be closely monitored by investors later in the day for further insights on the monetary policy direction.

"There may be some profit booking as Chair Powell may not sound too dovish and PMIs may be reassuring," Singh said.