Chennai: Gold prices made a new all-time high both in the international market as well as the Indian market, driven by escalating geopolitical tensions in the Middle East and the anticipated easing of policies by major central banks this year.
In the international market, gold made a fresh high of $2450 per ounce breaking the previous high of $2431 made on April 12, 2023. This year gold prices have gone up by 18.65 per cent.
The market was optimistic about gold’s potential to scale higher on the expectation that the Federal Reserve might implement at least two rate cuts this year. Further, renewed geopolitical tensions in the Middle East have bolstered gold prices. Over the weekend, a helicopter carrying Iranian President Ebrahim Raisi crashed in dense fog, increasing regional instability. Additionally, a China-bound oil tanker was struck by a Houthi missile in the Red Sea, further exacerbating tensions.
The rise in international rates saw gold in the Indian market moving up to a new high of Rs 74,411 per 10 gm. “The potential shift towards more accommodative monetary policies by global central banks is also enhancing the appeal of gold. Easing policies lower the opportunity cost of holding gold, as interest rates decline and alternative investments yield lower returns,” said Ajay Kedia, MD, Kedia Commodities.
Silver prices too have reached multi-year highs. In the international market, silver touched $32.51 per ounce, which was the highest level since December 2012 when silver had touched a record high of $33.85. In the Indian market, silver made a high of Rs 93,379 per kg. This year, spot silver has surged by 32 per cent and it has outperformed gold as well as other commodities. The rally in silver prices has been driven by strong investment and industrial demand.
“Given the current economic and geopolitical landscape, gold is expected to surpass its previous target of Rs 75,000 per 10 grams and test higher levels of Rs 78,000 to Rs 80,000 per 10 grams by the end of 2024. Silver, which we had a predicted target of Rs. 100,000 on Diwali 2023, has already crossed Rs. 93,000 and is anticipated to hit Rs. 100,000 by the end of 2024, with potential to aggressively target Rs. 120,000 within the same period,” said Kedia.
