Gold, silver ETFs rally on US Fed rate cut expectations, festive demand

Mumbai, Sep 2 (IANS) Gold and silver prices have reached record high driven by investors' anticipation of a US Federal Reserve rate cut, festive demand and a declining dollar, analysts said on Tuesday.

In India, the price of 24-carat gold per gram ended at Rs 10,499 on Monday, according to data published by the India Bullion and Jewellers Association (IBJA). The 24-carat gold on MCX was priced at Rs 105,880 per 10 grammes, while silver was at Rs 1.05 lakh per kilogramme.

Spot gold had touched $3,493.10 per ounce, approaching its April record of $3,500.05 at market close. The December gold futures rose to $3,546.10 per ounce and silver reached $40.84 per ounce, marking its highest point since 2011.

Investors in exchange-traded funds (ETFs) also received handsome returns as Nippon India Gold BeES went up 1.49 per cent to Rs 86.61, HDFC Gold ETF went up 1.59 per cent to Rs 89.43. SBI Gold ETF surged 1.67 per cent, and ICICI Prudential Gold ETF advanced 1.77 per cent. Investors in Gold ETF has received around 40 per cent retturns in one year.

Silver ETFs showed strong performance, with HDFC Silver ETF rising 4.58 per cent to Rs 119.14. Other ETFs, including ICICI Prudential Silver ETF and UTI Silver ETF, saw gains over 3.7 per cent.

Silver ETFs have returned around 36 per cent in a year to investors. Silver ETF inflows in August reached a three-year high at around 800 million ounces, supported by festive-related buying.

Analysts linked the rally to expectations of a US Fed rate cut at the September 17-18 meeting, weak US payroll data, concerns over tariff inflation, and increased industrial demand for silver from EVs and solar, along with a five-year supply deficit.

"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 – Precious Metal - Research, Motilal Oswal Financial Services Ltd.

"The US dollar languished near a more than one-month low against major crosses; after positive growth, the US PCE price index rose 0.2 per cent MoM and 2.6 per cent YoY, both in line with expectations," he added.

Rahul Kalantri, VP Commodities, Mehta Equities Ltd, said that the upward trend is further reinforced by subdued inflation figures, a weakening U.S. dollar, and mounting speculation regarding imminent cuts in borrowing cost.

Market participants are now awaiting the forthcoming US employment data for additional guidance, he added.

--IANS

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