Gold Price Nears All-Time High After US Fed Rate Cut

Gold prices gained sharply after the US Fed cut its lending rate. And then the metal started inching towards its all-time high in India.

Let’s be real, the domestic gold futures price opened Friday trade on the MCX at ₹1,32,486 per 10 grams for 24-Carat gold. The price dipped a bit in the morning, which happens, but it quickly recovered to ₹1,32,676 by late morning. The gold peak for India was hit way back on October 17 during the festive season, climbing to ₹1,35,024. Now, the rate is creeping back up, showing gains of 1.77% in a week and 1.73% over the last month. Internationally, the spot price is sitting just above 4,271 an ounce.

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The thing is, the recent surge comes right after the US Federal Reserve cut its lending rate by 25 basis points (bps)—their third consecutive cut.

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The Fed Effect: Why Gold Loves Rate Cuts

The logic here is pretty straightforward.

• When the Fed cuts interest rates, the value of cash—money just sitting in a bank or even held in a short-term bond—falls. You earn less yield.

• Traders and investors quickly choose to buy or invest in assets that don’t rely on interest, like gold. Gold doesn’t give you interest, but it stores wealth.

• The demand for gold goes up. And then the price follows.

The Augmont Bullion report noted that both Gold and silver skyrocketed even with the Fed hinting at a lower rate reduction in 2026. This dovish stance is the real driver. The Fed also mentioned buying approximately 40 billion in short-term Treasury bills to relieve money market stress. This asset buying is seen as increasing market liquidity, which historically helps bolster precious metals.

Consumer Side and Future Outlook

The spike in price has had an effect on the ground, or nothing. Analysts pinned the “higher prices” as the reason for the decline in physical sales; gold sales actually dropped 35% year-over-year in November.

But the momentum is ongoing. Gold is trading steadily as it moves toward its all-time high, largely due to that cautious rate cut. Here’s the kicker for next week:

• The US job and inflation data for November will drop.

• A detailed economic growth report for Q3 will follow.

These economic releases will definitely determine the trajectory of gold. Plus, any positive news about a Ukraine peace deal could limit the bullion’s upside, as that reduces global geopolitical risk (a major driver of gold’s safe-haven demand).

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