Gold hits record Rs 1.03 lakh amid Fed rate cut hopes, weaker rupee; what lies ahead

Gold surged to a historic Rs 1,03,420 per 10 grams in Delhi on Thursday, as global market dynamics, a weakening rupee, and safe-haven demand converged to propel prices higher. The rally was fuelled by growing expectations that the US Federal Reserve will cut interest rates in September, following softer-than-expected US inflation data that weakened the dollar and boosted bullion’s appeal.

In the global market, spot gold edged up 0.2% to $3,359.81 per ounce at 0410 GMT, while US gold futures for December delivery climbed 0.3% to $3,408.50 per ounce. In India, 24 karat gold was quoted at ₹1.01 lakh per 10 grams, 22 karat at Rs 92,900, and 18 karat at Rs 76,010, according to Goodreturns.

Why gold is rallying

July’s US consumer price data showed only a marginal rise, reinforcing expectations of a rate cut at the Fed’s September 17 meeting. Traders have priced in an almost certain cut, with some even betting on a larger 50 basis points reduction. Lower interest rates tend to depress bond yields, making non-yielding assets like gold more attractive.

The dollar’s weakness, near one-week low US Treasury yields, and escalating global trade tensions have further fuelled safe-haven demand. Rahul Kalantri, VP – Commodities at Mehta Equities, noted that the combination of dollar softness and expectations of monetary easing is giving bullion strong upward momentum.

Central banks and geopolitical risk

A key structural driver behind gold’s long-term rally has been sustained buying by central banks. According to Riya Singh, research analyst at Emkay Global Financial Services, central banks purchased 290 tonnes in the first half of 2025 — absorbing nearly 15% of the global mine supply.

Geopolitical uncertainty continues to underpin gold’s safe-haven status. Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, pointed out that market participants are awaiting the August 15 US–Russia meeting on Ukraine peace talks. Meanwhile, US tariff actions have created fresh uncertainty, with Puja Singh, CEO of Manipal Fintech, noting that earlier tariff announcements briefly pushed international prices to record highs near $3,534 per ounce.

Adding to domestic price pressure, the rupee’s slide to 87.8 against the US dollar has made gold imports costlier.

Outlook: Rally to sustain?

Analysts believe gold’s upward momentum is far from over. “Sustained central bank buying, continued rupee weakness, and evolving trade dynamics could keep prices elevated,” says Riya Singh, who sees investment demand as the primary driver. She adds that if US labour market weakness persists, the Fed could be pushed towards deeper rate cuts — a scenario that would depress real yields and potentially propel gold to $3,500–3,600 per ounce.

Trivesh D, COO of Tradejini, expects safe-haven buying to remain strong, citing tariff uncertainty, slowing global growth, and potential flare-ups in geopolitical risks. Slowing global growth, coupled with a pivot by central banks towards more accommodative policies, is likely to lend further support to gold prices.

For investors, the advice is mixed. Existing holders may consider booking partial profits to rebalance their gold allocation, while new investors are urged to enter gradually given the sharp run-up. With global macroeconomic uncertainty still in play, gold looks set to remain a glittering — if volatile — asset in the months ahead.