Gold has shown a tremendous rally over the past year, rewarding investors with nearly 48% returns between September 2, 2024, and September 2, 2025. During the period, the price jumped from ₹71,259 per 10 grams to ₹1,05,217 on the MCX. 

"Today, spot gold hit a record high of $3,508, buoyed by dovish Fed expectations and increased safe-haven demand amid ongoing legal, political, and geopolitical tensions," said Kaynat Chainwala, AVP-commodity research, Kotak Securities.

The gold prices have touched a more than four-month high, supported by a weaker dollar and growing expectations for a U.S. interest rate cut this month. "Despite widespread global volatilities, investment in safe-haven assets continues unabated, boosting sentiment in the precious metals sector. In the last week, propelled by hopes of a cut in the U.S. Federal Reserve interest rate and weakening of the dollar, MCX gold futures jumped to record highs," says Aksha Kamboj, vice president, India Bullion & Jewellers Association (IBJA) and Executive Chairperson, Aspect Global Ventures.

However, the dollar languished near a more than one-month low against major crosses. The rupee also dropped to its all-time high as the India–U.S. tariff tiff continues to build tensions. "After positive growth, the U.S. PCE price index rose 0.2% MoM and 2.6% YoY, both in line with expectations. U.S. Treasury Secretary Scott Bessent said the Fed is and should be independent, but added that it had "made a lot of mistakes" and defended President Trump's right to fire Fed Governor Lisa Cook over allegations of mortgage fraud," said Manav Modi, analyst–precious metal, research, Motilal Oswal Financial Services Ltd.

President Trump has criticised the Fed and its chair, Jerome Powell, for months for not lowering interest rates, and recently took aim at Powell over a costly renovation of the bank's Washington headquarters. The probability for a 25-bps rate cut in the September meeting has increased to 90%. "Along with rate cuts and uncertainties, overall demand for bullion is keeping the buying interest active," said Modi.

According to analysts, market participants are now awaiting the forthcoming U.S. employment data for additional guidance. Simultaneously, legal opposition to President Trump’s tariff policies and debates surrounding the Federal Reserve’s autonomy—particularly in light of efforts to remove Governor Lisa Cook—have increased investor demand for safe-haven assets, thereby enhancing the appeal of gold and silver.

"This upward trend is further reinforced by subdued inflation figures, a weakening U.S. dollar, and mounting speculation regarding imminent cuts in borrowing costs—conditions typically favourable to non-yielding assets such as precious metals," said Rahul Kalantri, VP commodities, Mehta Equities Ltd.

Additionally, Darshan Desai, CEO, Aspect Bullion & Refinery, said, "Steady inflows into precious metal ETFs and sustained central bank purchases are helping prevent any significant downward correction, even in the absence of strong immediate catalysts. Notably, central banks now hold more gold than U.S. Treasuries for the first time in three decades, which underscores the continued demand. Unless a major negative event emerges, gold prices are likely to stay elevated."