Gold rates cross ₹1 lakh mark on MCX for first time ever: Driving factors explained

Gold prices in India hit an all-time high on Friday (June 13). It breached the ₹1 lakh per 10-gram mark on the Multi Commodity Exchange (MCX) for the first time. The surge comes amid a weak rupee, heightened geopolitical tensions in the Middle East and increased global demand for safe-haven assets.

Domestic gold futures jumped 2% to touch ₹1,00,403 per 10 grams in early trade. This psychological milestone reflects both domestic currency weakness and strong overseas cues.

“Gold prices extended their gains following Israel’s airstrikes on Iran earlier today, intensifying the already fragile geopolitical landscape in the Middle East,” said Aksha Kamboj, Vice President, India Bullion and Jewellers Association and Executive Chairperson, Aspect Global. “Any further escalation is likely to drive gold prices

even higher, potentially retesting earlier record levels.”

Several key factors are driving this historic rally:

Geopolitical unrest

Tensions escalated after Israel launched airstrikes on Iran, prompting fears of retaliation. Israel has declared a state of emergency, anticipating missile and drone attacks, while the US is preparing evacuation plans for civilians in the region.

“Gold and silver rallied sharply amid escalating Israel-Iran tensions, boosting safe-haven demand,” said Rahul Kalantri, Vice President, Commodities at Mehta Equities. “Gold breached the $3,420 per ounce mark and hit six-week highs as the dollar index weakened.”

Weakening rupee

A depreciating Indian rupee has made imported gold more expensive, further lifting domestic prices.

Cooling US inflation and rate cut expectations

Recent US economic data showed signs of a cooling labor market and slowing inflation. Weekly jobless claims rose to an eight-month high, and the Producer Price Index (PPI) showed subdued inflation. These factors have strengthened expectations of interest rate cuts by the Federal Reserve.

Traders are now pricing in a 55-basis-point cut by year-end, starting as early as September. Lower interest rates tend to support gold prices, as they reduce the opportunity cost of holding non-yielding assets like gold.

Global market trends

Spot gold rose 1.3% to $3,428.28 an ounce, its highest since May 7. US gold futures climbed 1.4% to $3,449.60 an ounce. Bullion has gained over 3.5% this week alone.

“This latest spike in hostilities in the Middle East has taken the focus off trade negotiations for now, with investors making a play towards safe-haven assets,” said Tim Waterer, Chief Market Analyst at KCM Trade.

Support and resistance levels

According to Kalantri, in international markets, gold has support at $3,400–$3,475 an ounce and resistance at $3,455–$3,480 an ounce. In the domestic market, gold has support at ₹97,920–₹97,490 per 10 grams and resistance at ₹99,650–₹1,00,640 per 10 grams.

Outlook

Market experts believe the rally could continue if geopolitical tensions persist and US data continues to support the case for interest rate cuts.

“Uncertainty surrounding the US-China trade negotiations, compounded by President Donald Trump's threat to impose unilateral tariffs, has pushed investors toward traditional safe-haven assets,” Kamboj added.

-With Reuters inputs