Gold scales ₹79,000 mark in Kerala as market waits for Fed rate cut cues

Continuing their upward trend, gold prices in Kerala scaled a new high on Saturday, with the price of a sovereign (8 gm) rising by ₹640 to reach ₹79,560. The price of one gram of gold also increased by ₹80, reaching a record ₹9,945, according to the All Kerala Gold and Silver Merchants Association, which determines the daily rate of the yellow metal in the state. 

Traders said the rally was growing amid conviction that the Federal Reserve may opt for an interest rate cut at its upcoming policy meeting on September 16-17.

Analysts have also flagged the independence of the Fed as a key factor in shaping gold's trajectory—an issue thrust into the spotlight after US President Donald Trump attempted to fire Fed Governor Lisa Cook and put repeated pressure on the central bank to slash rates, Reuters reported. 

Bullion, which does not pay interest, tends to shine when rates are low and uncertainty is high, making it a go-to asset for investors seeking safety. China and India are top gold consumers. Physical demand for gold in these hubs dropped this week due to record high prices. According to the All India Sarafa Association, gold of 99.5 per cent purity also advanced by ₹900 to ₹106,100 per 10 gm (inclusive of all taxes) on Friday, from the previous close of ₹105,200 per 10 gm.

"Pessimism regarding the peace deal between Russia and Ukraine, due to a lack of progress, has also heightened demand for safe-haven assets," said Saumil Gandhi, Senior Analyst - Commodities at HDFC Securities. 

The price of 18-karat gold in Kerala reached ₹8,235 per gram, a rise of ₹65. The rate of silver remained ₹134 per gram, according to AKGSMA.
(with PTI inputs)