Gold prices in India were largely stable on Wednesday. A gram of gold was priced at INR 11,018.16, while a tola cost INR 128,513.70. Since the start of 2025, gold prices have risen by 45%, with an over 11% increase in September. The uncertainty in the market is boosting demand for gold as a safe investment.

Missed Republican Spending Bill Vote

A missed vote on a Republican spending bill has increased the risk of a government shutdown. This could negatively impact economic performance and lead the US Federal Reserve to ease its policies. CME Group’s FedWatch Tool shows a nearly 95% chance of an interest rate cut in October and about 75% for December. Traders appear unfazed by recent comments from Dallas Fed President Lorie Logan. The JOLTS report shows that job openings reached 7.22 million in August, exceeding expectations. At the same time, geopolitical tensions persist, particularly regarding potential US missile supplies to Ukraine. Gold prices in India are calculated by FXStreet using the USD to INR exchange rate and are updated daily. While these rates serve as a guide, local gold prices may differ.

Gold Price Influences

Gold prices are influenced by various factors, including geopolitical unrest, interest rates, and the US Dollar’s performance. Central banks’ high gold reserves and gold’s role as a safe haven highlight its global demand. With a remarkable 45% increase in gold prices since early 2025, the short-term outlook is positive. The market is currently pricing in a 95% chance of a Federal Reserve rate cut this month, which could further drive up prices for non-yielding assets like gold. We should focus on strategies that take advantage of this upward trend as demand is fueled by both political and geopolitical worries. Traders might want to consider buying call options to benefit from potential gains while reducing downside risk. In the last two weeks, there has been over a 20% rise in open interest for December gold call options, particularly for prices above $3,500 per ounce. This suggests strong market confidence that new record highs are possible before the year ends. However, following such a rapid rise, we must brace for potential volatility. Past rallies, like in 2020, remind us that sharp but brief pullbacks may happen with any favorable economic news or resolution regarding the government shutdown. Using bull call spreads could be a wise way to lower costs and manage risk in this situation. The risk of a prolonged US government shutdown could be a key factor pushing prices higher in the short term. Any news hinting at a breakdown in negotiations could trigger immediate price spikes, so keeping an eye on futures market activity as key political deadlines approach is essential. Additionally, central bank demand remains robust; World Gold Council data for Q2 2025 shows purchases are on track to rival record levels seen in 2022. It’s also important to monitor the US Dollar, which typically moves inversely to gold. The Dollar Index (DXY) has dropped 4% in September amid expectations of Federal Reserve easing. If the Fed hints at further cuts in 2026, continued dollar weakness could provide a significant boost for gold prices in the coming weeks. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now