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Gold Prices See Sharp Rise Amid US Fed Rate-Cut Expectations
Gold prices in India jumped sharply on Tuesday, November 25, after renewed expectations that the US Federal Reserve may cut interest rates in December.
On the Multi Commodity Exchange (MCX):
- Gold December futures surged 1% to ₹1,25,106 per 10 grams at 9:15 AM.
- Silver December futures rose 1.34% to ₹1,56,551 per kg.
This reflects a strong early-morning rally across precious metal contracts.
Global Gold Prices Also Rise Nearly 2%
International gold prices climbed around 2% in the previous trading session as investors shifted towards safe-haven assets following speculation about a potential rate cut in the US.
A rate cut typically:
- Lowers the return on interest-bearing assets
- Makes gold more attractive since it does not yield interest
- Increases demand for gold as a hedge against economic uncertainty
Why Investors Expect a Rate Cut
A report by Reuters highlighted comments from New York Fed President John Williams, who suggested that interest rates could be cut soon in the US.
Williams stated:
- Cutting rates will not derail the Fed’s fight against inflation
- It could help protect jobs and support economic stability
His remarks boosted global market confidence that the Fed may move towards easing monetary policy sooner than expected.
Why Lower Interest Rates Push Gold Prices Up
Gold tends to perform well in a low-interest-rate environment because:
- Investors earn lower returns from bonds and savings accounts
- They shift money into safe-haven commodities like gold
- Gold becomes more attractive due to the reduced opportunity cost
With expectations of a December rate cut growing, both institutional and retail investors have increased gold buying.
