Indian gold prices saw a significant surge on Thursday, December 11, with MCX gold futures jumping by ₹1,500 per 10 grams. The rally followed a quarter-point interest rate cut by the US Federal Reserve, which bolstered gold's appeal as a safe-haven asset. The move marked the third consecutive rate reduction by the US central bank this year, bringing the federal funds rate to its lowest level in over three years, ranging from 3.50% to 3.75%. #^[1][2][3]## Gold Gains Momentum After Fed Action The US Federal Reserve's decision to cut interest rates on December 10 spurred immediate positive reactions in the bullion market. On the Multi Commodity Exchange (MCX), February gold futures opened higher at ₹1,30,259 per 10 grams, up from their previous close of ₹1,29,796. By Thu^[1]rsday evening, MCX gold was trading at ₹1,34,243 per 10 grams, reflecting a gain of ₹1,159, or 1.12%. The 24-car^[1]at gold price in India on December 11 was ₹130,630 per 10 grams, showing a gain of ₹1,080 compared to its previous close. This strong up^[4]ward movement pushed gold prices closer to their all-time highs. International^[5] spot gold prices also edged higher, rising 0.7% to reach $4,236.57 per ounce, while US gold ^[6]futures for February delivery climbed more than 1% to $4,271.30 per ounce. The rate cut b^[2]y the Federal Open Market Committee (FOMC) was widely anticipated by markets. ### Why Rate ^[1]Cuts Boost Gold's Appeal Lower interest rates typically make non-yielding assets like gold more attractive to investors. When interest ^[5][2][7]rates on bonds and other fixed-income investments fall, the "opportunity cost" of holding gold, which does not pay interest, decreases. This encourages investors to shift capital into gold, viewing it as a more appealing store of value. The US Federal Reserve's rate cut also led to a weaker US dollar, which further supports gold prices. A softer dolla^[5][4][2][8]r makes dollar-denominated gold cheaper for buyers using other currencies, thereby increasing demand. Analysts at SMC Global Securities noted that gold prices extended their fourth consecutive weekly gain on MCX, despite a modest decline in COMEX gold, as investors grew cautious ahead of inflation data. Ross Maxwell, ^[9]Global Strategy Operations Lead at VT Markets, explained that "A softer dollar, combined with lower interest rates, supports gold and silver by reducing the opportunity cost of holding non-yielding assets". ### Silver Jo^[2][7]ins the Rally with Record Highs The precious metals market saw broad-based gains, with silver also experiencing an unprecedented rally. MCX silver March futures hit a new all-time high of ₹1,92,565 per kilogram, and even surged ^[6]past the ₹2 lakh per kilogram mark in some instances. On December 11, si^[10]lver March futures opened higher by ₹3,830 or 2% at ₹1,92,565 per kilogram. Spot silver prices cli^[6]mbed to a record $61.85 per ounce internationally. Silver's strong perfo^[6]rmance is not solely due to the Fed's rate cut. It also benefits from robust industrial demand, declining inventories, and its recent classification as a critical mineral in the US. The metal has surged 1^[6][4]13% this year, reflecting strong momentum in the broader precious metals market. ### Geopolitical Tens^[6]ions and Future Outlook Beyond monetary policy, geopolitical risks continue to fuel gold's safe-haven appeal. Ongoing uncertainties,^[6][4][7] such as the US interception of a sanctioned tanker near Venezuela and the lingering Russia-Ukraine conflict, contribute to investor demand for assets perceived as safe during times of global instability. Dr. Renisha Chainani, ^[6][4][7]Head of Research at Augmont, stated that precious metals are reacting not only to the Fed's policy but also to rising geopolitical risks. Despite the recent ra^[7]te cut, the US Federal Reserve indicated a cautious approach to future easing. New projections released after the FOMC meeting showed that most policymakers anticipate only one more rate cut in 2026. Fed Chair Jerome Powel^{[6][5][4][1][2][7][3]}l did not provide a clear indication of when the next reduction might occur. He also flagged potent^[1]ial distortions in recent data caused by a government shutdown, which might overstate signs of economic weakness. The Indian rupee's pe^[6]rformance also plays a role in domestic gold prices. A weaker Indian Rupee, trading around 86.45 per US dollar, adds nearly a 1% premium to local gold prices. Combined with a 15% im^[5]port duty, this keeps domestic rates firm. Experts remain largel^[5]y bullish on gold. Augmont Bullion sees strong support for gold around $4,200 (₹1,29,000) and resistance near $4,300 (₹1,32,000). If upcoming US jobs data o^[5]n December 16 comes in softer than expected, gold could test ₹1,34,000 by month-end. Investors are advised to con^[5]sider gold for a 5-8% portfolio allocation, buying on dips below ₹1,29,000. Rahul Kalantri, VP of commodit^[5]ies at Mehta Equities, noted that gold has support at ₹1,29,050 and ₹1,28,450, with resistance at ₹1,30,550 and ₹1,31,300. He maintains a bullish view, targeting^[2] gold at ₹1,35,000 in the short term. The market will now closely monitor upc^[2]oming US economic data, including inflation numbers and the PCE Price Index, which will influence expectations about the Fed's future interest rate path.

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