New Delhi: Global gold prices surged by more than one percent on Monday, driven by growing expectations of an imminent interest rate cut by the U.S. Federal Reserve and mounting worries over a slowdown in the American economy. The precious metal climbed to around $4,050 per ounce, reflecting renewed investor confidence in gold as a safe-haven asset amid signs of weakening global growth.
The surge comes after a series of disappointing U.S. economic indicators. The American labor market showed fresh cracks, with job losses reported across government and retail sectors, while several corporations continued layoffs amid cost-cutting measures and increased automation. These developments have heightened fears that the world’s largest economy may be approaching a significant deceleration. Analysts believe that the slowdown could prompt the Federal Reserve to begin cutting interest rates as early as December, a move that would further fuel gold’s rally.
Lower interest rates generally reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors. As a result, spot gold rose by 1.4% to $4,053.40 per ounce, while U.S. gold futures for December delivery gained 1.3% to $4,062.40 in early trade. The rally extended to other precious metals as well, with silver climbing 1.8% to $49.18, platinum gaining 1.3% to $1,565.36, and palladium rising 0.7% to $1,389.94.
Data from the SPDR Gold Trust the world’s largest gold-backed exchange-traded fund showed holdings inching up to 1,042.06 metric tons from 1,040.35 tons in the previous session. The modest uptick indicates renewed institutional interest in the metal, as investors seek protection against both economic volatility and inflationary risks.
Adding to the market unease, U.S. consumer sentiment slipped to a three-and-a-half-year low amid uncertainty over the protracted government shutdown, which has now stretched into its 40th day. The shutdown has disrupted several economic data releases and deepened the sense of instability across financial markets. Economists say that the lack of reliable data has only amplified speculation about the Fed’s next move and added to gold’s allure.
For India, one of the world’s largest gold consumers, the surge in international prices has significant implications. Higher global rates are likely to push up domestic gold prices, affecting jewellery demand ahead of the upcoming wedding and festive season. Rising import costs could also widen India’s trade deficit, putting pressure on the rupee and complicating the Reserve Bank of India’s efforts to maintain currency stability.
Jewellery retailers across India are already reporting rising wholesale prices and a dip in bulk buying, as customers wait to see whether the rally will cool. However, with the dollar showing signs of weakness amid Fed rate-cut expectations, analysts believe the upward trend in gold may persist through the year-end, particularly if geopolitical tensions or economic shocks intensify.
Market experts warn, however, that the rally remains vulnerable to any shift in monetary policy sentiment. If upcoming U.S. data especially inflation and employment figures show unexpected strength, the Fed may delay easing measures, leading to a short-term correction in gold prices. Conversely, continued weakness in the economic outlook could propel gold to new highs, with some analysts predicting a test of the $4,100 per ounce mark before the end of the year.
As the global economy teeters between uncertainty and cautious optimism, gold continues to serve as a barometer of investor anxiety. With inflation concerns, political instability, and uneven growth all clouding the global outlook, the yellow metal’s latest rally may be a precursor to a broader shift in investment sentiment toward safe-haven assets.