Gold prices broke the record on Tuesday and increased to the most monthly lead in 14 years due to the US political deadlock and soft trends of the Federal Reserve promoted shopping for safe investment. The spot gold fell to $ 3,862 after touching the highest level of $ 3,871 an ounce, which shows a growth of 0.76% that day and 11.09% in September – it is the best performance after a 15% rise of August 2011. In India, according to data from the India Bullion and Jewelers Association (IBJA), 24 carat gold (10 grams) reached a new level of Rs 1,15,450, which reflects the global boom between the demand for the festive season.
The rally intensified due to US President Donald Trump and Democratic leaders failing to overcome differences at the White House Summit, causing the government to partially shut down from Wednesday. If there is no expansion in funding till midnight on Tuesday midnight, the federal services – including the September employment report of the Labor Department – will be reduced, which will increase economic uncertainty. The weak dollar, declining 0.3% between this turmoil, increased the appeal of gold as a non-profit hedge.
Encouraged by Friday’s stable PCE inflation data, traders are now betting on aggressive relaxation in interest rates by Fed. The fedwatch tool of the CME Group shows 89% probability of deduction of 25 basis points in the 29–30 October meeting, while a total of 50 basis points including December are 93% likely. St. Louis Fed Chairman Alberto Muslim, cautiously agreed, confirmed the openness for further cuts, but urged to take restraint to deal with inflation made up one percent above 2%. Keeping a look at the inflation risks of tariffs, he said, “The policy is between minor restrictive and neutral.”
The fourth consecutive Diwali cycle in the bullion market has seen faster than the Indian stock markets, which has been the highest in seven of the eight years. The reason for this is more than 1,000 tonnes in the hoarding of central banks – and more than $ 85 billion in ETF. Silver also repeated the same bounce and overtook the stock markets for the third consecutive year due to the demand of solar energy, semiconductor and electric vehicles.
Nevertheless, if the upcoming American indicators-the opportunity, private sector salary, ISM manufacturing and Friday’s non-agricultural pay-lightness indicate, the enlargement can be limited. Goldman Sachs has warned that if the freedom of Fed is low under Trump’s pressure, it can reach $ 5,000. While investors are ready for instability, 45% annual growth of gold further strengthens its safe investment status in unstable global system. In India, festive buyers are keeping an eye on IBJA rates – will this peak remain?
