Gold prices touched a historic milestone in India on Wednesday morning (September 3), with rates surging to ₹1,06,199 per 10 grams in the domestic futures market. The jump comes amid a stable US dollar and growing speculation that the US Federal Reserve may cut interest rates this month.
At 9:15 AM, MCX Gold October futures were trading 0.19% higher at ₹1,05,992 per 10 grams, while MCX Silver December futures slipped 0.11% to ₹1,24,391 per kg.
Why Are Gold Prices Rising?
Several factors have been fueling the rally in gold:
- US Federal Reserve’s Expected Rate Cut – Investors widely believe the Fed will announce a 25-basis-point rate cut on September 17, which could further support gold demand. According to Reuters, CME Group’s FedWatch tool shows a 92% probability of a rate cut this month.
- Trump’s Tariffs – Ongoing trade tensions and tariffs, particularly those imposed on Indian goods, are adding to global uncertainty. US President Donald Trump recently said he is not considering lowering tariffs on India, sparking concerns of long-term economic pressure.
- Global Gold Rally – International gold markets are also witnessing historic highs. U.S. gold futures climbed to $3,616.70 per troy ounce, reflecting strong safe-haven demand amid fears of slowing global growth.
Impact on Indian Economy
Rising gold prices may benefit investors and traders, but they can also weigh heavily on the Indian economy:
- Higher Import Bill – India is one of the world’s largest importers of gold. With record-high prices, the import bill could rise sharply, impacting the trade deficit.
- Consumer Pressure – For households, especially during the festive and wedding seasons, higher gold prices may reduce demand for jewelry purchases.
- Inflation Concerns – A prolonged period of high prices may also fuel inflationary pressures, creating challenges for policymakers.
What to Watch Next
The US non-farm payrolls data, scheduled to be released on Friday, will be closely monitored. Strong employment numbers could reduce the chances of a steep Fed rate cut, while weak data may reinforce expectations of further monetary easing.
For now, market analysts believe that economic uncertainty, US tariffs, and Fed policy decisions will continue to support gold at elevated levels.
Conclusion
Gold has always been seen as a safe-haven asset in times of uncertainty, and the current global economic environment is proving no different. With record-breaking highs in both Indian and global markets, investors are keeping a close eye on the Federal Reserve’s decision on September 17, which could determine the next big move in gold prices.