Gold Shines Bright on MCX as Fed Rate Cut Hopes Soar
Gold prices on the Multi Commodity Exchange of India (MCX) witnessed a significant uptick on Friday, climbing half a percent as growing anticipation of an interest rate reduction by the US Federal Reserve next month fueled gains in international bullion markets. This positive momentum underscores gold's enduring appeal as a safe-haven asset during periods of economic uncertainty.
Domestic and International Price Movement
The MCX gold contract for February expiry demonstrated robust performance, trading higher by ₹647, or 0.51%, to reach ₹1,28,314 per 10 grams. During the session, it even touched an intraday peak of ₹1,28,450. Mirroring this trend, MCX silver prices also advanced, rising by ₹1,485, or 0.89%, to settle at ₹1,67,472 per kg.
This domestic rally was firmly supported by a strong global backdrop. In the international markets, gold prices were set to secure their fourth consecutive monthly increase. Investor sentiment was notably buoyed by the optimism surrounding a potential rate cut in the Fed's upcoming December policy meeting. The spot gold price jumped 0.8% to $4,189.61 per ounce, marking its highest level since November 14. It was also on track for an impressive 3% weekly gain and a 3.9% monthly rise. US gold futures for December delivery followed suit, increasing by 0.5% to $4,221.30 per ounce. Spot silver joined the rally with a 1.4% increase to $54.18 per ounce.
Analysts Weigh In: Is Now the Time to Buy Gold?
Jigar Trivedi, Senior Research Analyst at Reliance Securities, provided valuable context for the surge. He pointed to a combination of factors driving global demand, including geopolitical tensions, inflation fears, and sustained gold-buying by central banks. For India, he highlighted that seasonal factors like festivals and weddings typically boost demand, which in turn exerts upward pressure on prices. "With economic uncertainties globally — inflation, currency fluctuations, rate-cut expectations — gold remains attractive for investors seeking stability and long-term value preservation," Trivedi stated.
Market analysts largely expect gold prices to maintain their upward trajectory. This outlook is based on rising bets that the US Fed could implement three additional rate cuts by the end of 2026. Since gold is a non-yielding asset, it tends to perform exceptionally well in low-interest-rate environments. Recent comments from Fed officials, including San Francisco Fed President Mary Daly and Fed Governor Christopher Waller, have further solidified market expectations for a policy easing as early as next month.
The CME's FedWatch tool reflects this strong sentiment, indicating that US rate futures are now pricing in an 87% probability of a rate cut in December. This is a substantial increase from 50% just a week prior. A contributing factor to gold's appeal has been the US dollar's weakness, which was headed for its worst week since late July. A softer dollar makes gold cheaper for holders of other currencies, thereby stimulating demand.
However, analysts also caution that optimism about a US-led peace plan for the Russia-Ukraine conflict could potentially limit further sharp gains in gold prices by reducing its safe-haven appeal.
Despite this, Trivedi maintains a bullish stance, expecting gold prices to remain strong or even climb higher due to continued safe-haven demand and potential macroeconomic triggers. He offers clear guidance for investors: "Thus, if the goal is long-term preservation of wealth or a hedge against inflation and volatility — rather than trying to 'time the bottom' — buying gold now can be a reasonable decision."
He provided specific technical levels, identifying ₹1,30,000 per 10 grams as a near-term resistance and ₹1,26,000 per 10 grams as a strong support level. His concrete recommendation for traders is to "go long in the December month for a target of ₹1,30,000 per 10 grams with a stop loss near ₹1,27,000 per 10 grams."
