Gold prices in Kerala rose sharply on Monday, climbing by ₹400 per sovereign to touch a record ₹79,880. Earlier in the day, the rate had dipped by ₹80, with gold priced at ₹79,480 in the morning before the sudden afternoon surge.

The price of one gram now stands at ₹9,985- just ₹15 short of the ₹10,000 mark. The price of gram in the state earlier declined by ₹10 to ₹9,975, according to the All Kerala Gold and Silver Merchants Association, which determines the daily rate of the yellow metal in the state. 

The spike in gold prices is in line with a global rally, driven by growing expectations of an interest rate cut by the US Federal Reserve during its upcoming meeting on September 16-17. Gold price in the international market breached the $3,600 per ounce for the first time, and is currently trading at $3,612, according to Reuters.

The anticipation of lower rates has led investors to turn to gold, considered a safe-haven asset. Gold and interest rates generally share an inverse relationship — when interest rates fall, gold prices tend to rise, as lower returns on interest-bearing assets make gold more attractive, increasing its demand and price.

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As a result, gold rates in Kerala- which closely follow global market trends- have gone up. The price of 18-karat gold reached ₹8,270 per gram. The rate of silver also increased to ₹135 per gram, according to AKGSMA.

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