MCX Gold Rate Today Could Reach ₹78,000 per 10 gm if Israel-Iran Conflict Persists, Experts Warn
Gold prices have been on an upward trajectory over the past few weeks, driven by a combination of geopolitical tensions and macroeconomic conditions. The current instability in the Middle East, particularly the ongoing Israel-Iran conflict, is fueling investor demand for safe-haven assets like gold. On Friday, October 11, 2024, the Multi Commodity Exchange (MCX) gold rate closed higher at ₹76,307 per 10 grams, continuing a bullish trend that could see the yellow metal touching ₹78,000 per 10 grams by Diwali if the conflict shows no signs of resolution.
Gold’s global market price has also surged. Spot gold saw an increase of over 1%, reaching $2,657.26 per ounce, while the COMEX gold price jumped 1.32%, closing at $2,674.20 per troy ounce. These price movements are largely attributed to a series of macroeconomic events, including the release of the US Consumer Price Index (CPI) data and the subsequent easing of US inflation concerns. The anticipation of a possible interest rate cut by the US Federal Reserve has added further fuel to the rally in gold prices.
The Role of US Inflation in Gold’s Rally
The release of US CPI data played a pivotal role in the latest surge in gold prices. Anuj Gupta, Head of Commodity & Currency at HDFC Securities, explained that the CPI data was in line with market expectations, showing a slight increase in US consumer prices for September. However, the annual inflation rate is the lowest it has been in the last three and a half years. This has significantly eased inflationary pressures on the US economy, leading to speculation that the Federal Reserve might cut interest rates by 25 basis points in its next meeting.
This expectation of a Fed rate cut is key to gold’s rising demand. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive for investors. Additionally, gold prices tend to benefit from periods of inflationary concern and currency depreciation, as investors look for a hedge against potential economic instability.
Jateen Trivedi, VP of Research—Commodity & Currency at LKP Securities, noted that high jobless claims and elevated crude oil prices are also contributing to inflationary pressures in the US, further supporting the case for an interest rate cut. “Fundamentally, gold has been influenced by global macroeconomic conditions, particularly the strength of the US dollar and bond yields,” Trivedi said. “If economic data indicates a weakening US economy, gold could see even more safe-haven demand, pushing prices higher.”
Geopolitical Tensions: The Israel-Iran Conflict
Apart from macroeconomic factors, geopolitical tensions are playing a significant role in pushing gold prices upward. The ongoing Israel-Iran conflict has escalated fears in the global markets, prompting investors to flock to safe assets like gold. Historically, gold tends to perform well during periods of heightened geopolitical risk, as it is viewed as a reliable store of value in times of uncertainty.
Ameya Ranadive, Senior Technical Analyst at StoxBox, commented on the geopolitical influence, saying, “Any escalation in the Israel-Iran conflict, much like the Israel-Palestine tensions, is likely to drive up gold prices further. Investors are turning to gold as a safe-haven asset, and if the situation worsens, we could see an even greater surge in demand.”
Moreover, the conflict is impacting global oil prices, which could indirectly affect gold. The Middle East is a critical region for oil production, and any disruptions in supply chains could lead to spikes in oil prices. Elevated oil prices tend to exacerbate inflationary pressures, further driving up demand for inflation hedges like gold.
Important Levels to Watch
As of now, the spot gold price in the international market is fluctuating between $2,640 and $2,700 per troy ounce. On the domestic front, the MCX gold rate has breached key resistance levels at ₹76,200 to ₹76,250 per 10 grams after closing above the ₹76,300 mark. Experts believe that the continued depreciation of the Indian rupee against the US dollar is also contributing to the rise in gold prices in India.
Anuj Gupta from HDFC Securities suggests that if the Israel-Iran conflict remains unresolved, we can expect MCX gold prices to touch ₹78,000 per 10 grams by Diwali 2024. The festive season typically brings increased demand for gold in India, as it is traditionally viewed as an auspicious and valuable asset during celebrations. This seasonal demand, combined with the ongoing geopolitical instability, is likely to keep gold prices elevated in the coming weeks.
Gold Rates in Delhi
Gold Rate Today in India’s capital, Delhi, also surged last week. The price of gold in Delhi jumped by ₹1,150 per 10 grams, reaching ₹78,500 per 10 grams on Friday. This increase brings gold prices near their all-time highs, as fresh buying from jewellers and a strong global trend continued to push prices upward. The precious metal of 99.9% purity had previously closed at ₹77,350 per 10 grams on Thursday, showing a significant one-day gain.
Jewellers are capitalizing on the positive global trend and increased demand for gold ahead of Diwali and other upcoming festivals. The demand is expected to grow further, especially if the Israel-Iran conflict persists and inflationary concerns remain in the spotlight.
Conclusion: A Safe-Haven Surge
The combination of easing US inflation, geopolitical tensions in the Middle East, and macroeconomic concerns have created the perfect storm for gold prices to surge. Investors are increasingly seeking the safety of gold, and the market outlook remains bullish in the near term. If geopolitical risks, particularly the Israel-Iran conflict, continue to escalate, gold prices may breach ₹78,000 per 10 grams on MCX by Diwali.
However, it’s important to note that market conditions are fluid, and gold’s trajectory will depend on a variety of factors, including the Federal Reserve’s actions, further developments in the Middle East, and the performance of the global economy. Investors should remain cautious and consult financial experts before making significant investment decisions in this volatile environment.
| City | Gold (Rs/10gram) | Silver (Rs/kg) |
|---|---|---|
| Chennai | 53,720 | 75,000 |
| Mumbai | 53,650 | 72,100 |
| Delhi | 53,800 | 72,100 |
| Kolkata | 53,650 | 72,100 |
Disclaimer: The views and recommendations expressed in this article are those of individual analysts or brokerage firms and do not constitute financial advice. Investors are encouraged to seek professional guidance before making any investment decisions, as market conditions can change rapidly.
