Gold futures hits fresh peak on Fed rate-cut hopes, weak dollar

New Delhi: Gold prices rose Rs 384 to touch a record of Rs 1,10,563 per 10 grams in the domestic futures market on Tuesday, buoyed by strong global cues and expectations of a rate cut by the Federal Reserve that spurred safe-haven demand.

On the Multi Commodity Exchange (MCX), gold futures for October delivery climbed Rs 384 or 0.34 per cent to touch a record Rs 1,10,563 per 10 grams. The contract had touched a previous high of Rs 1,10,330 in the last session.

Similarly, the December contract advanced by Rs 418 or 0.37 per cent to hit a fresh peak of Rs 1,11,655 per 10 grams against the earlier high of Rs 1,11,350.

"Gold prices scaled a record peak, supported by a weaker dollar and US Treasury bond yields ahead of the Federal Reserve's policy meeting, where the central bank is widely expected to cut borrowing rates," Manav Modi, Research Analyst for Precious Metals at Motilal Oswal Financial Services, said.

The dollar index, which tracks the greenback against a basket of six currencies, slipped 0.34 per cent to 96.97, further aiding bullion prices.

"Market participants are awaiting Fed Chair Jerome Powell's statement and projections this week, with a 25 basis points rate cut largely priced in after a long pause. US President Donald Trump called for Fed Chair Powell to enact a 'bigger' cut to benchmark interest rates via a social media post," Modi added.

In the overseas markets, gold futures jumped to a record USD 3,736.97 per ounce. The momentum was also fuelled by geopolitical tensions in the Middle East and Ukraine.

Adding to the uncertainty, a US appeals court rejected an attempt by President Trump to remove Fed Governor Lisa Cook, a move seen as challenging the central bank's independence.

Meanwhile, US Treasury Secretary Scott said the government would not impose additional tariffs on Chinese goods to encourage China to halt purchases of Russian oil unless European countries hit China and India with steep duties of their own.

"Investors will closely track US retail sales and industrial output data for further cues on the Fed's monetary stance and the near-term direction of gold," Modi added.