Gold prices continued to shine as they hit another historic high in Friday’s session, December 12, supported by a sustained drop in the US Dollar index, weighed down by the prospect of rate cuts next year.
The February futures contract on MCX opened higher at ₹1,32,442 per 10 grams, compared to the previous close of ₹1,32,469, and maintained momentum to touch a fresh record high of ₹1,35,263 per 10 grams, bringing the year-to-date rally to 75%, putting the yellow metal on track for its biggest annual gain since 1979.
By 8:30 PM IST, MCX gold was trading ₹2,684, or 2.03%, higher at ₹1,35,153 per 10 grams. The spot gold prices also edged higher, rising 1.35% to $4,346 per ounce, marking a seven-week high and just 0.80% below the record high of $4,381.
Silver prices also touched a record high of ₹2,01,615 per kilo on MCX, crossing ₹2 lakh for the first time and taking its year-to-date rally to 130%, nearly double the gain of gold.
The US dollar index, which measures the currency against six major peers, hovered near two-month lows around 98.3 on Friday and was on track for a third consecutive weekly drop. The index is down more than 9% this year, on pace for its steepest annual decline since 2017.
The Fed cut rates as expected this week, but comments from Fed Chair Jerome Powell and the accompanying statement were seen by investors as less hawkish than anticipated, reinforcing dollar-selling momentum.
Meanwhile, the US jobless claims rose by the most in nearly 4 1/2 years last week, reversing the sharp drop seen in the previous week.
Ongoing rally could push gold prices to ₹1.50 lakh, says analyst
Anindya Banerjee, Head of Currency and Commodity at Kotak Securities, said the initial pace of around $40 billion in T-bill purchases starting mid-December is being viewed by markets as a form of quasi-QE.
He added that, combined with a 25-basis point rate cut at a time when U.S. inflation risks are tilting higher, this has amplified concerns about faster dollar debasement. Naturally, both gold and silver have responded with strong gains, he noted.
Banerjee further said that silver is also benefiting from a notable physical squeeze, with Asian buyers aggressively demanding physical delivery while Western sellers are finding it increasingly difficult to meet their derivative‐linked obligations.
On the outlook, Banerjee expects gold prices to scale to ₹1,50,000 per 10 grams and silver to reach ₹2,20,000 per kilogram in the medium term.
(With inputs from Reuters)
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