BIG JUMP! Gold prices reach all-time high! Top 5 reasons behind the surge

Gold prices in global commodity markets have been scaling new highs in last one month. Federal Reserve, Sino-US trade war escalation, negative long-term bond yield are the reasons.

The gold prices in domestic markets by Diwali is expected to show around Rs 39,000 per 10 gms to Rs 40,000 per 10 gms, say experts. Photo: Reuters

Gold prices in global commodity markets have been scaling new heights in the past one month. According to the commodity market experts, interest rate cut by US Federal Reserve, Sino-US trade war escalation, negative long-term bond yield in the US markets is some of the major reasons for skyrocketing gold prices in the global commodity markets. They are of the opinion that by Diwali, the gold prices in Indian may show Rs 39,000 to Rs 40,000 per 10 gms while in the global commodity market, the yellow metal may show $1,560 to 1,580 per ounce levels.

Speaking on the reason for rising in gold prices Anuj Gupta, Deputy Vice President — Currency and Commodities at Angel Broking said, "Major reason for rising in gold prices is the negative long-term bond yield in the US. In the last ten years, bond yield has been negative in the US markets that have forced investors towards gold. apart from that, the US Fed has been maintaining that if the inflation in the US remains controlled, there can be a further rate cut in future, which has also fuelled the gold prices at international commodity markets."

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Anuj Gupta of Angel Broking listed out the following top 5 reasons that have fuelled the gold prices globally:

1] Negative Bond Yield: The long-term bond yield means for the last ten years bond yield in the US markets has been negative. Due to this, gold prices are soaring.

2] Dovish Fed: The US Fed has been maintaining that if the US inflation remains under control, it will further cut the interest rates in the future.

3] Trade War: The China-US trade tension has put oil in the barbecue and it has also fuelled the gold prices globally.

4] Geopolitical tension: The recent Hond Kong unrest and US-Middle East tension is still not over.

5] Rise in consumption: As festival season is fast approaching in Asian and later on in the US and Europe, the gold consumption is expected to remain on the higher side and hence the gold prices are not ready to climb down.

Asked about the prices of gold that we can witness this Diwali Amit Sajeja, Analyst at Motilal Oswal Commodities said, "The gold prices in domestic markets by Diwali is expected to show around Rs 39,000 per 10 gms to Rs 40,000 per 10 gms while in international markets, the yellow metal is poised to show $1,560 to $1,580 per ounce."

At the Multi Commodity Exchange (MCX), the October contract of gold touched an intra-day high of Rs 38,220 per 10 gram. Earlier, the precious metal touched a lifetime high of Rs 38,666 per 10 gram. At 3.05 PM, the October contract of Gold was trading at Rs 37,851 per 10 gram, down Rs 312 or 0.82 per cent.

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