Gold prices experienced a significant rally in the national capital on Wednesday, surging by ₹1,100 to breach the psychologically important ₹1.21 lakh per 10 grams threshold. This sharp escalation was attributed to strong global cues, primarily stemming from the US government shutdown after Congress failed to approve essential federal funding.

According to data compiled by the All India Sarafa Association, the precious metal of 99.9 percent purity settled at a new peak of ₹1,21,100 per 10 grams (inclusive of all taxes).

Gold of 99.5 percent purity also appreciated by ₹1,100, reaching a lifetime high of ₹1,20,500 per 10 grams.

Market Drivers and Global Context

Traders and analysts cited two major international developments fueling the price surge: the ongoing political deadlock in the US and strengthening expectations for monetary easing by the Federal Reserve.

A recent weakening in the US labour market has reinforced bets on imminent interest rate cuts by the Fed, which typically supports bullion prices as it lowers the opportunity cost of holding the non-yielding asset.

The US government shutdown further enhanced gold's appeal as a safe-haven asset amid political uncertainty.

In overseas markets, the rally was even more pronounced. Spot gold rose more than 1 percent to hit a record high of USD 3,895.33 per ounce. Concurrently, spot silver also increased by nearly 2 percent globally, achieving a high of USD 47.56 per ounce.

Despite the sharp rise in gold, domestic silver prices remained flat at their record high of ₹1,50,500 per kilogram (inclusive of all taxes), according to the association.