Gold has been on a record-breaking run, climbing to $3,390 an ounce in spot trade and $3,445 in US futures, driven largely by expectations of a Federal Reserve interest rate cut. Markets are pricing in a 25
basis point cut with an 88% probability, which could weaken the US dollar and make gold a more attractive investment.
In Hyderabad, gold prices have surged by Rs 5,000 in August alone, with 24-carat gold now at Rs 1,04,950 and 22-carat gold at Rs 96,200. In Delhi, gold surged to Rs 1,05,113 while in Chennai it was Rs 1,04,961. In Bengaluru, the yellow metal shot up to Rs1,04,955, and in Mumbai, it was Rs 1,04,967. Analysts expect the upward momentum to continue next month.
Why The Fed Matters For Gold
When the Fed cuts rates, the dollar typically weakens. This reduces the appeal of dollar-based investments like bonds and cash, making gold a preferred hedge against inflation, market volatility, and global uncertainty. A lower PCE price index for July—expected at 2.6%—would strengthen the case for a rate cut, likely pushing gold prices higher.
Dollar Strength And Geopolitics: The Other Key Factors
A stronger dollar makes gold more expensive for foreign buyers, briefly cooling demand. But August’s short-lived dollar rally has not changed the overall bullish outlook.
Meanwhile, geopolitical tensions, Middle East instability, and global trade concerns continue to drive investors toward gold as a safe-haven asset. Whenever confidence in economic stability wavers, gold prices tend to rise.
What Analysts Are Saying
- RBC Capital Markets projects gold could hit $3,722 by Q4 2025 and $3,813 in 2026.
- HSBC offers a more cautious view, expecting a possible dip to $3,215.
- Technical charts show an ascending triangle pattern, hinting at further gains with levels around $3,700–$3,735 seen as achievable in the near term.
Bottom Line For Indian Buyers
With US rate cuts on the horizon, a volatile dollar, and lingering geopolitical risks, gold is likely to remain a safe-haven asset in the months ahead.
For Indian buyers, local prices will track global trends, with GST and making charges adding to retail costs.
