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Informist, Thursday, Aug. 21, 2025

MUMBAI – BMI, a unit of Fitch Solutions, has revised its annual average gold price forecast for 2025 to $3,250 per ounce, up from the previous projection of $3,100 per ounce. It expects prices of gold to move between $3,200 per ounce and $3,600 per ounce and is neutral-to-bullish on the precious metal for the rest of this year.

Gold prices are expected to remain high in the coming weeks as the market braces for an interest rate cut by the US Federal Open Market Committee in September. However, the upside for gold following the rate cut will be limited with most of it "already priced in", BMI said in a report. If the Fed holds interest rates steady in September, then gold prices are likely to fall to $3,000 per ounce.

"Our Country Risk team maintains our view that the Fed will cut by 50bps this year (September and December) and by another 50bps to a terminal rate of 3.50% next year. That said, the impact of the US Fed's rate cuts henceforth will be more nuanced on gold prices than in 2024, being mostly priced in by now. Yet, this remains a bullish factor for gold, until the market starts to believe the Fed would not cut this year," BMI said.

Since mid-April, gold prices have largely been in a range between $3,200 per ounce and $3,400 per ounce through August. Despite global trade tensions easing and political risks abating, gold prices have shown little inclination to decline. BMI also noted an increasing desensitivity in gold prices towards a weaker dollar and lower bond yields as market participants appear to have largely priced these in.

At 1359 IST, the most-active December gold contract on COMEX was 0.2% lower at $3,382.4 per ounce. "While a host of global tensions continue to persist, we see some uncertainties easing, to the detriment of gold as a safe haven asset. We expect that Iran and the US will re-engage in diplomatic talks following the recent Iran-Israel war, though the next few months will be critical as the ceasefire remains very fragile," BMI said.  End

US$1 = INR 87.19

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Ashutosh Pati

Edited by Rajeev Pai

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