Gold prices in India saw an upward move on Tuesday, according to FXStreet data, reflecting broader global bullish trends in the precious metals market. The spot price of gold in India was recorded at INR 10,336.95 per gram, up from INR 10,291.12 per gram on Monday. Similarly, the tola price increased to INR 120,568.00, compared with INR 120,033.60 the previous day.
This daily gain reinforces the ongoing positive momentum in gold, supported by multiple macroeconomic and geopolitical factors. Nabotex Group’s broker Richard Miller provides readers with a comprehensive overview of this issue.
Gold Gains Amid Fed Rate Cut Bets
The bullish sentiment in gold is primarily underpinned by speculation over potential Federal Reserve (Fed) interest rate cuts. Data released last Friday showing soft US labor market figures strengthened expectations that the Fed will ease monetary policy at its upcoming September 16-17 FOMC meeting.
Traders are now pricing in the possibility of a jumbo rate cut, with the likelihood of three interest rate reductions by the end of 2025.
Gold, as a non-yielding safe-haven asset, benefits from these dynamics. Lower interest rates reduce the opportunity cost of holding gold, boosting demand among investors seeking inflation protection and portfolio diversification.
The current market environment, characterized by monetary easing expectations, has propelled XAU/USD to new highs for the third consecutive trading session, signaling a strong uptrend.
USD Weakness Supports Gold Prices
The US Dollar (USD) continues to trade near its lowest level since July 28, influenced by political pressures and ongoing economic uncertainty. The US President’s criticisms of Fed Chair Jerome Powell for delaying action on borrowing costs have contributed to currency depreciation, as have his calls to dismiss Fed governors, raising concerns about the central bank’s independence.
A weaker USD typically supports gold prices because it makes gold cheaper for foreign buyers, increasing global demand. In the Indian context, this dynamic, combined with local market conditions, has helped push gold prices higher, reinforcing its role as a hedge against currency volatility and macroeconomic risks.
Geopolitical Tensions Add to Safe-Haven Demand
Apart from monetary policy dynamics, geopolitical factors continue to drive investor demand for gold. Political instability in France saw Prime Minister Francois Bayrou lose a vote of confidence in the National Assembly, resulting in his resignation.
Over the weekend, Japanese Prime Minister Shigeru Ishiba revealed his plan to resign from his role as President of the ruling Liberal Democratic Party (LDP).
Meanwhile, renewed tensions in Eastern Europe and the Russia-Ukraine conflict have elevated risk premiums. The US President indicated potential new sanctions on Russia after the country launched its largest-ever rocket and drone attack on Ukraine.
The Ukrainian President stressed the importance of a strong US response, reinforcing geopolitical uncertainty.
Such events often increase safe-haven flows into precious metals, particularly gold, as investors look to preserve capital amid heightened market volatility. These geopolitical risks, combined with global economic uncertainty, are significant drivers behind the recent gold price rally in India.
Market Outlook and Key Drivers
Market participants now turn their attention to the upcoming release of US inflation data, which is expected to have a substantial impact on USD dynamics and gold valuation. Rising inflation could further solidify gold’s position as a hedge against price pressures, while lower-than-expected inflation may reinforce Fed easing expectations, supporting bullish gold trends.
From a technical perspective, gold appears to have established a strong upward momentum, with XAU/USD moving towards fresh record highs. However, analysts note that overbought conditions in the short term may lead to minor pullbacks or consolidation, though the overall trajectory remains upward.
In India, bullion investors and retail buyers continue to monitor both gram and tola prices closely, as the market reacts to global cues and domestic demand trends. With gold prices rising steadily, the commodity remains an attractive investment option, especially for those seeking stability amid macroeconomic uncertainty.
Conclusion
To summarize, Indian gold prices rose on Tuesday, reaching INR 10,336.95 per gram and INR 120,568.00 per tola, driven by Fed rate cut expectations, USD weakness, and heightened geopolitical tensions. The combination of macro-economic indicators, safe-haven demand, and market speculation continues to support bullish momentum in gold markets.
Investors and analysts remain cautiously optimistic, noting that while short-term overbought conditions may prompt temporary corrections, the fundamental backdrop points to continued upward pressure on gold prices. The Indian gold market is likely to remain sensitive to global monetary policy moves, geopolitical developments, and currency fluctuations, making it a critical component of diversified investment strategies.
