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Informist, Tuesday, Sept. 2, 2025

 

By J. Navya Sruthi

 

MUMBAI – Gold prices, which lost steam in July and early August, are back on a fresh rally and are expected to hit new lifetime highs on both domestic and international markets in September. A weak dollar and hopes of a rate cut by the US Federal Reserve later this month continue to support the rally in gold prices. Additionally, weakness in the Indian rupee against the dollar will also support gold prices on the Multi Commodity Exchange of India, traders and analysts said.

 

The most-active October gold contract on the MCX rose Monday to a new lifetime high of INR 105,937 per 10 grams, up over 7% from prices on Jul. 31. Despite US markets being shut Monday on account of Labour Day, gold prices on COMEX rose to a high of $3,557.1 an ounce, up nearly 5% from prices on Jul. 31. Prices rose further Tuesday to $3,578.4 an ounce, a new all-time high. 

 

"Prices of gold and silver are likely to rise further to new levels on domestic markets as the rupee is expected to depreciate further against the dollar," Sriram Iyer, senior research analyst at Reliance Securities, said. The domestic currency is likely to set new record lows due to concerns over US reciprocal tariffs on Indian exports to the US, he added.

 

Anindya Banerjee, senior vice president for commodity and currency at Kotak Securities, expects the rupee to fall to 88.60-89.60 per dollar in the near term. On Monday, the rupee fell to a new all-time low of 88.33 against the dollar. When the rupee depreciates against the dollar, prices of gold in the domestic market adjust for the currency depreciation.

 

While there are hopes that the additional 25% tariffs on Indian exports to the US will be removed, "I do not see it happening till this year-end," Iyer of Reliance Securities said. On the international front, gold prices are expected to rise further due to safe-haven demand and de-dollarisation, Banerjee said.

 

The October gold futures on the MCX are seen at INR 100,500-INR 109,500 per 10 grams during the month, according to the median of estimates of eight brokerages polled by Informist. On the COMEX, gold prices are seen at $3,400-$3,650 an ounce in September. At 1035 IST, the October gold contract was up 0.45% at INR 105,254 per 10 grams and the December gold contract on the COMEX was up over 1% at $3,565.9 an ounce.

 

The high US fiscal deficit and increasing debt of the country is boosting safe-haven demand for gold, analysts said. The continuous fall in the dollar index and rising expectations of a rate cut by the US Federal Reserve this month will support the rally in gold prices, they said.

 

According to the CME FedWatch tool, traders see an 87.6% probability of a 25-basis-point rate cut by the Federal Reserve in its September meeting, higher than the 84.7% last week. Lower interest rates increase the appeal of the non-interest-yielding precious metal. The dollar index was at 97.692 Monday, lower than 100.051 on Jul. 31. A weaker dollar makes dollar-denominated commodities such as gold cheaper for those holding other currencies, thereby increasing demand for the metal.

 

Worries about the independence of the US Federal Reserve are also supporting gold prices. A US court is hearing Fed Governor Lisa Cook's challenge of her dismissal by US President Donald Trump. A decision on this case is expected Tuesday.

 

"The reputation and independence of the Fed are at stake," Carsten Fritsch, commodity analyst at Commerzbank, said in a report. "US Vice President Vance added fuel to the fire in the dispute with the Fed. In his opinion, the government will not allow monetary policy decisions to be made without the input from the people who were elected to serve the American people."  

 

"In other words, Vance is demanding that the US government should have a say in monetary policy. This would mark the end of independent monetary policy. Gold is benefiting from this uncertainty, as shown by inflows into gold ETFs (exchange-traded funds) of just under 15 tons (tonnes) in the last two days," Fritsch said.

 

Analysts expect gold prices to reach around $3,800 per ounce by the end of 2025. Continuous buying of gold by global central banks, inflows into gold exchange-traded funds due to a rise in the safe-haven demand, and uncertainty over trade tariffs are likely to support gold prices in the short term, Manoj Kumar Jain, director at Prithvi Finmart, said.

 

According to the World Gold Council, global gold exchange-traded funds saw inflows of $3.2 billion in July. Inflows into global gold ETFs are currently on track for their second-strongest year on record, the Council said. Global gold holdings increased by 23 tonnes in July to 3,639 tonnes, the highest month-end total since August 2022, the Council said.

 

However, analysts also see profit booking at these levels. "The rally (in gold prices) is driven by long-term and geopolitical factors," Ajay Kedia, director at Kedia Advisory, said. "It may last 1–2 months, but sustainability is uncertain...profit booking is likely." Kedia has also advised buyers to be cautious at these levels.

 

Market participants now await the US jobless claims and non-farm payrolls data later this week. They are also eyeing the Federal Open Market Committee's Sept. 16-17 meeting for cues on rate-cut projections for the rest of 2025.

 

If the US non-farm payrolls data is positive, gold prices may fall as traders are likely to book profits, however, if the data is below expectations, gold prices could rally further, Deveya Gaglani, senior research analyst-commodities at Axis Securities, said. Analysts polled by Dow Jones expect 75,000 jobs to be created in August, up from 73,000 in July.

 

Following are the details of estimates of brokerages on gold prices for September, in alphabetical order:

Brokerage	MCX  support (INR/10 gm)	MCX resistance (INR/10 gm)	COMEX support ($/oz)	COMEX resistance ($/oz)
Axis Sec	102,000	108,000	3,440	3,650
Emkay	100,000	111,000	3,250	3,690
Kedia	102,800	107,400	3,380	3,640
Kotak	102,000	110,000	3,430	3,650
LKP Securities	100,000	107,500	3,400	3,550
Nirmal Bang	99,000	110,000	3,420	3,710
Prithvi Finmart	101,500	107,000	3,410	3,620
Reliance Sec	99,950	110,000	3,390	3,590
Ventura Securities	100,500	109,500	3,350	3,720
Median	100,500	109,500	3,400	3,650

 

End

 

US$1 = INR 88.05

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

 

With inputs from Ashutosh Pati

Edited by Tanima Banerjee

 

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