Gold prices today hit fresh record high. What’s driving the rally?

“US Fed has raised interest rates by 25 bps in yesterday’s FOMC meeting that signals is soft stance on rate hike. This has led to US dollar rates nosedivingto 9-month low and this is also a reason for gold price rally in domestic and international market,” said Anuj Gupta, Vice President — Research at IIFL Securities.

In the international market, spot gold surged to $1,951.79 per ounce, after hitting its highest since April 2022 earlier in the session. The Fed delivered a quarter-percentage-point rate increase on Wednesday after a year of larger hikes. However, Powell warned of further monetary policy tightening while noting the progress on disinflation, which he said was in its early stages. Gold tends to benefit in a lower interest rate environment, as it reduces the opportunity cost of holding non-yielding bullion.

On the reason for rise in gold and silver prices on MCX, market expert Sugandha Sachdeva said,” Budget 2023 has proposed to increase duty on silver dore, bars, and articles to bring it at par with gold and platinum dore and bars. Import duty on silver has been raised from 7.5% to 10%, along with 5% agriculture and infrastructure cess, implying a net duty of 15%. The social welfare surcharge has however been removed. Besides, duty on silver dore has been increased from 6% to 10%, implying a total duty of 14.35%. Overall precious metal imported jewellery and articles (gold/silver/platinum) now attract an import duty of 25% as against 20% previously. Separately, capital gains tax has been exempted for conversion of physical gold in to EGR, a further step towards boosting financialisation of gold.”

The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

(With inputs from agencies)