Gold prices surged over 0.5% to reach record highs on Friday, driven by escalating geopolitical tensions and anticipated US rate cuts in the coming year. MCX gold February futures climbed 0.72% to a record Rs 1,39,091 per 10 grams, while MCX silver March futures soared 3.56% to a record Rs 2,31,759 per kg by 10:10 am. The surge in silver futures saw an intraday peak of Rs 2,32,741 per kg earlier in the day.
The spike in gold prices is primarily attributed to the escalating tensions between the US and Venezuela. In the international markets, spot gold surged by 0.5% to $4,501.44 per ounce at 0209 Greenwich Mean Time (GMT) after hitting $4,530.60. Traders are factoring in two quarter-point Fed rate cuts in 2026, anticipating subdued inflation and softening labor market conditions, alongside safe-haven demand amid rising geopolitical tensions, driving defensive purchases.
Geopolitical tensions have heightened due to various factors, including the US blockade of Venezuelan crude, Russia-Ukraine hostilities, and US military actions against ISIS in Nigeria. Recent events, such as the US Coast Guard seizing a sanctioned super tanker carrying Venezuelan oil and attempting to intercept two other Venezuela-related vessels over the weekend, have further exacerbated tensions. Rahul Kalantri, VP Commodities at Mehta Equities Ltd., noted that central bank purchases and steady ETF inflows are crucial support elements for gold, with specific support and resistance levels identified for both gold and silver.
Analysts attribute the surge in gold and silver prices this year to aggressive central bank buying, expectations of US Fed rate cuts, concerns regarding the impact of US tariffs, geopolitical tensions, and strong inflows into gold and silver ETFs.
