MCX Gold Hits Record High of Rs 1,20,900 per 10 Grams: Factors Behind Rising Gold Prices

Gold prices have surged to unprecedented levels, with futures reaching Rs 1,20,900 per 10 grams, marking an increase of Rs 651. This rise is attributed to favorable global market conditions, ongoing uncertainties surrounding the US government shutdown, and speculation regarding potential interest rate cuts by the Federal Reserve. Additionally, silver futures have also seen a notable increase, trading close to their record levels.

Record Highs in Gold Futures

On Tuesday, gold futures on the Multi Commodity Exchange (MCX) experienced a significant rise, climbing by Rs 651, or 0.54%, to reach Rs 1,20,900 per 10 grams. The February 2026 gold futures contract also saw a notable increase, rising by Rs 648, or 0.53%, to establish a new high of Rs 1,22,231 per 10 grams. Market analysts, including Manav Modi from Motilal Oswal Financial Services, attribute this surge to the current economic and political uncertainties in the US, coupled with expectations of further interest rate cuts by the Federal Reserve.

The ongoing US government shutdown has contributed to the volatility in the gold market. Analysts note that the shutdown has delayed critical economic data releases, including the September employment report. This lack of official indicators has heightened the appeal of gold as a safe-haven asset, especially in light of anticipated interest rate reductions later this year.

Silver Futures Also on the Rise

In tandem with gold, silver futures have shown positive momentum, increasing by Rs 281, or 0.19%, and trading near their record level of Rs 1,47,800 per kilogram. The March 2026 silver futures contract advanced by Rs 327, or 0.21%, reaching Rs 1,49,500 per kg, following its previous session’s record of Rs 1,49,605 per kilogram. The silver market has also been influenced by the same economic factors affecting gold, with investors seeking refuge in precious metals amid uncertainty.

The international markets reflect similar trends, with Comex gold futures for December delivery surpassing $4,000 per ounce, marking a near 1% increase. However, silver futures for December delivery experienced a slight decline, trading at $48.43 per ounce. The fluctuations in both gold and silver prices highlight the ongoing volatility in the precious metals market.

Central Banks Driving Demand

The World Gold Council (WGC) has reported a resurgence in gold purchases by central banks, with global reserves increasing by 15 tonnes in August. This trend underscores the growing demand for gold as a strategic asset among central banks worldwide. The People’s Bank of China (PBOC) has also reported an increase in its gold reserves, which reached 74.06 million fine troy ounces by the end of September, up from 74.02 million the previous month. This marks the eleventh consecutive month of gold acquisition by the PBOC.

Experts suggest that the sustained buying by central banks is a significant factor driving the record rally in gold prices. As central banks continue to bolster their gold reserves, the demand for the precious metal is expected to remain strong, further supporting its price increases.

Market Outlook and Federal Reserve Insights

Market participants are closely monitoring upcoming statements from Federal Reserve officials, which could provide insights into the future direction of monetary policy. The focus this week will also be on the Federal Open Market Committee (FOMC) meeting minutes and Fed Chair Jerome Powell’s speech scheduled for Thursday. These events are anticipated to shed light on the US economy and the Fed’s approach to interest rates moving forward.

As the market navigates through these uncertainties, investors are likely to remain vigilant, assessing the implications of economic data and central bank policies on gold and silver prices. The interplay of these factors will continue to shape the landscape of precious metals trading in the coming weeks.

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