Gold prices in India rose on Tuesday, reaching 11,026.96 Indian Rupees per gram, up from 10,935.27 INR the day before. The price per tola also increased to 128,617.30 INR from 127,546.90 INR on Monday. The US Dollar Index fell by 0.27% to 97.91, and US Treasury yields decreased, with the 10-year note down three basis points at 4.141%. In the US, Pending Home Sales improved 4% in August compared to the previous month.

Switzerland’s Interest in US Gold Refining

According to Bloomberg, Switzerland is interested in investing in the US gold-refining industry to reduce import tariffs. The US Personal Consumption Expenditures Price Index remained stable, affecting expectations for potential easing by the Federal Reserve. The market now believes there is an 89% chance of a 25 basis point rate cut in October. FXStreet updates Indian gold prices daily based on international rates adjusted for local currency. Gold is a key store of value, often purchased by central banks, including those in China, India, and Turkey. Its price usually increases when the US Dollar weakens and interest rates drop, acting as a safeguard during economic uncertainty. The recent rise in gold prices is fueled by a weaker US Dollar and declining government bond yields. The US Dollar Index (DXY) is around 101.50, and the 10-year Treasury yield has dropped to 3.85%, raising concerns about a possible economic slowdown. This classic inverse relationship makes gold cheaper for foreign buyers, boosting its attractiveness compared to assets that yield interest.

Focus on Federal Reserve Policy

Attention is now on future Federal Reserve policies. Recent inflation data indicates that the core Personal Consumption Expenditures (PCE) index has cooled to 2.6%. The CME FedWatch Tool shows a 70% chance of an initial interest rate cut by the second quarter of 2026. This expectation of looser monetary policy is pressuring the dollar and yields, which supports gold prices. This economic uncertainty enhances gold’s reputation as a safe-haven asset. Ongoing geopolitical tensions and leading economic indicators suggest slower growth, prompting investors to seek safety. We observed a similar trend during the economic concerns of late 2023, where gold’s value rose even when rates were high. Central banks are significant players in this market. After adding nearly 1,037 tonnes in 2023, they continue to be significant net buyers into 2024. This sustained demand, especially from emerging markets, provides a solid foundation for gold prices and protects them from short-term fluctuations. Given the current situation, a bullish outlook on gold seems justified for the coming weeks. Derivative traders might consider taking long positions through futures contracts or buying call options to benefit from expected price increases. Key indicators to monitor include upcoming US jobs and inflation data, as any unexpected strength could alter expectations for Fed rate cuts, leading to a short-term pullback. Create your live VT Markets account and start trading now.

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