Gold Smashes Records! THESE 5 Factors Are Driving Frenzy In Bullion Markets: What Should Investors Do?

The gold prices in India have shattered multiple records in the first eight months of 2025. As we enter the ninth month of the year, the gold rate in India witnessed another historic high. The Multi Commodity Exchange of India Limited (MCX) gold price made a giant leap of Rs 2,133 in 10 grams on September 1.

In the retail market, the gold rate in India made a new record after jumping Rs 93 per gram to Rs 10,588 (for 24 Karat). Gold price valuation has surged by around 30% since the beginning of the year 2025. Here are the five key factors that led to a sharp surge in gold prices today.

Why Gold Prices Are Rising Today? 5 Key Reasons Explained

The gold reached an all-time high on Comex as well as on the domestic front. The day also saw a sharp increase in silver prices amid rising geopolitical tensions and expectations of US Fed rate cuts. Let's understand the five main reasons that sparked a massive gold price rally.

US Fed Rate Cut Expectations

US Fed Jerome Powell has hinted at a rate cut in September. A host of other US economic factors will also impact the gold demand. "As increased expectations of a U.S. Federal Reserve interest rate cut this month lifted bullion's allure.

After better-than-expected GDP data, the U.S. PCE price index rose 0.2% MoM and was up 2.6% on a YoY basis, both in line with expectations. Even though the data signals economies resilience, President Trump's pressure on Fed officials is continuously increasing rate cut expectations for September, which is currently at 85%," explained Manav Modi, Analyst - Precious Metal -Research, Motilal Oswal Financial Services Ltd.

Whenever the US Fed announces a rate cut, there is a decline in the returns on bonds, savings, and treasuries. Consequently, gold becomes more attractive for investors compared to these investment options.

Geopolitical And Trade Uncertainty

The US tariffs have sparked concerns around global trade. Whereas the ongoing conflict between Israel and Gaza has heightened geopolitical tensions. Legal proceedings against Trump tariffs could further fuel the gold price volatility in near term, according to experts.
"The US courts legal stand off and appeals on the Trump tariffs till 14th October could create volatility in gold.

Markets are also watchful on the political pressure regarding the Fed's independence," noted NS Ramaswamy Head -Commodity desk and CRM - Ventura. The US has imposed 50% tariffs on Indian items which will significantly impact the Indian companies' business to the US.

Weak US Dollar

The US Dollar index fell to its one-month low mark around 97.6 on Monday, according to Trading Economics. The weakness in the currency makes bullion attractive for investors as the gold is priced in the US dollar.

Weak Indian Currency

Despite weakening of US Dollar, the Indian Rupee dipped further on Monday. The Indian currency is currently hovering at an all-time low mark. It has underperformed significantly against Asian currencies amid high US tariffs. The rupee was quoting at 88.27 to the U.S. dollar, just shy of its lifetime low of 88.3075 hit on Friday, reported Reuters. A weaker rupee is also adding momentum to the domestic prices, highlighted NS Ramaswamy

China's Continued Gold Buying

The global demand for gold has increased significantly over the past few weeks. China's continued gold buying is one of the contributing factors in fuelling gold demand, hence its price, according to Ajay Kedia of Kedia Advisory.

"Increase in festive and wedding demand, ETF buying and Increased premiums in China are some of the additional factors supporting gold's bull run," stated Manav Modi

Gold At Record High: What Should Investors Do?

As the gold is currently close to its fresh record high mark, experts recommend to avoid any big investment decision as of now. "Key resistance lies at 1,06,400 / 1,08,000, while strong support is placed at 1,02,000, keeping the trend positive. Stay Cautious, avoid any big positions," noted Ajay Kedia.

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