Insights 
VT 
Gold prices in India increased on Tuesday, reaching 11,026.96 Indian Rupees per gram, up from 10,935.27 INR the previous day. The price per tola also rose to 128,617.30 INR from 127,546.90 INR on Monday.
The US Dollar Index decreased by 0.27% to 97.91, and US Treasury yields saw a decline, with the 10-year note down three basis points at 4.141%. Pending Home Sales in the US improved in August, showing a 4% increase month-on-month.
Switzerland Interest In US Gold Refining
Bloomberg noted Switzerland’s interest in investing in the US gold-refining sector to lower import tariffs imposed. The US Personal Consumption Expenditures Price Index steadied as expected, influencing expectations for further Federal Reserve easing.
The market now places an 89% probability on a 25 basis point rate cut in October. FXStreet bases Indian Gold prices on international rates adjusted to the local currency, updated daily.
Gold is an important store of value, often bought by central banks such as those in China, India, and Turkey. Its price tends to rise with a weakening US Dollar and lower interest rates, serving as a hedge during economic uncertainty.
The recent rise in gold prices is being driven by a weaker US Dollar and falling government bond yields. We are seeing the US Dollar Index (DXY) slip to around 101.50, while the 10-year Treasury yield has fallen to 3.85% amid growing concerns about a potential economic slowdown. This inverse relationship is a classic driver for bullion, making it cheaper for foreign buyers and increasing its appeal compared to yield-bearing assets.
Federal Reserve Policy Focus
Market focus is now firmly on future Federal Reserve policy, with recent inflation data showing that the core Personal Consumption Expenditures (PCE) index has cooled to 2.6%. The CME FedWatch Tool indicates that markets are now pricing in a 70% probability of an initial interest rate cut by the second quarter of 2026. This expectation of looser monetary policy is putting downward pressure on the dollar and yields, providing strong support for gold prices.
This economic uncertainty enhances gold’s status as a safe-haven asset. Ongoing geopolitical friction, combined with leading economic indicators pointing towards slower growth, is prompting a flight to safety. We saw a similar pattern during the economic jitters of late 2023, where gold rallied even as rates were high, demonstrating its value during turbulent times.
A major underlying factor is the continued purchasing by central banks. After adding a near-record 1,037 tonnes in 2023, central banks have continued to be significant net buyers through 2024 and into this year. This consistent demand, particularly from emerging markets, creates a strong floor for gold prices and insulates it from short-term volatility.
Given this environment, a bullish stance on gold appears warranted for the coming weeks. Derivative traders could consider establishing long positions through futures contracts or buying call options to capitalize on expected upward momentum. Key indicators to watch will be upcoming US jobs and inflation data, as any surprise strength could temper expectations for Fed rate cuts and cause a temporary pullback.
