Synopsis: Gold and silver prices have surged to record highs, driven by festive demand, weak US payroll data, and expectations of a Federal Reserve rate cut. Investors in Gold and Silver ETFs are reaping big gains, with annual returns of up to 40%.
Gold and silver prices hit fresh records this week as global and domestic factors aligned to push the precious metals higher. Investors are betting big on exchange-traded funds (ETFs), supported by anticipation of a US Federal Reserve rate cut, festive demand, and a declining dollar.
According to the India Bullion and Jewellers Association (IBJA), the price of 24-carat gold ended at Rs 10,499 per gram on Monday. On the Multi Commodity Exchange (MCX), gold futures were priced at Rs 1,05,880 per 10 grams, while silver climbed to Rs 1.05 lakh per kilogram.
Globally, spot gold touched $3,493.10 per ounce, close to its April peak of $3,500.05, while December futures surged to $3,546.10 per ounce. Silver rallied to $40.84 per ounce, its highest level since 2011.
ETF Investors Rejoice
Gold ETFs witnessed strong gains:
- Nippon India Gold BeES rose 1.49% to Rs 86.61
- HDFC Gold ETF gained 1.59% to Rs 89.43
- SBI Gold ETF climbed 1.67%
- ICICI Prudential Gold ETF advanced 1.77%
Overall, Gold ETF investors have earned nearly 40% returns in one year.
Silver ETFs outperformed even further:
- HDFC Silver ETF soared 4.58% to Rs 119.14
- ICICI Prudential Silver ETF and UTI Silver ETF gained over 3.7%
Silver ETFs delivered around 36% returns in the past year, with inflows in August reaching a three-year high of nearly 800 million ounces, largely supported by festive-related demand.
What’s Driving The Rally?
Analysts highlight multiple factors fueling this precious metal surge:
- US Fed cut expectations: A possible rate cut at the Fed’s September 17–18 meeting.
- Weak US payroll data: Signaling slower growth and monetary easing.
- Festive buying in India: Traditionally boosts gold and silver demand.
- Industrial silver demand: EV and solar sector growth keeps demand high.
- Global supply deficit: Silver faces a five-year supply gap.
“Gold prices climbed to a more than four-month high, inching closer to the all-time high touched in April, supported by a weaker dollar and growing expectations for a U.S. interest rate cut this month,” said Manav Modi, Analyst, Motilal Oswal Financial Services.
Adding to this, Rahul Kalantri, VP Commodities, Mehta Equities, noted that a weakening US dollar, subdued inflation data, and speculation about imminent borrowing cost cuts further boosted the uptrend.
Market participants now await US employment data for further cues on Fed policy direction.
Disclaimer: This article is for informational purposes only, based on publicly available market data and analyst commentary. It does not constitute investment advice. Readers are encouraged to consult certified financial advisors before making investment decisions.
