9 important reasons why gold prices are making historic highs

Gold prices have surged to record all-time highs of ₹109,475 per 10g in India. On MCX, it is hovering around ₹109,028 per 10g and globally above $3,645/oz, up 40% year-to-date as of September 10, 2025. This is happening due to a combination of festive demand, expectations of Fed rate cuts, weakening dollar, global slowdown fears, geopolitical tensions, and central bank buying. While some consumer jewellery demand may slow at these elevated levels, investment demand remains strong, reinforcing gold’s safe-haven status.

Here are nine critical reasons why gold prices are rising:

1. Domestic festive and wedding season demand

Not only at the international level, but also at the domestic level, according to Aksha Kamboj, Vice President, IBJA and Executive Chairperson, Aspect Global Ventures, there is strong domestic buying interest as the festive and wedding season begins. As Navratri and Diwali, along with the wedding season, approach, seasonal demand traditionally boosts jewellery purchases, although record-high prices may deter some price-sensitive households.

2. Expectations of U.S. Federal Reserve rate cuts

Both Aksha Kamboj and Darshan Desai, CEO of Aspect Bullion & Refinery, point out that markets are anticipating a larger-than-expected rate cut from the Federal Reserve. Lower U.S. interest rates reduce the opportunity cost of holding gold (which doesn’t earn interest), making it more attractive to investors.

3. Weakening U.S. dollar

The US Dollar Index Futures is trading at 97. A softer dollar, as highlighted by both experts, makes gold cheaper for overseas buyers and adds further upward pressure on gold prices.

4. Global economic slowdown signals

The U.S. government data revealed that job creation was likely 911,000 fewer than previously thought in the 12 months ending March. Recent nonfarm payroll statistics also showed weakening labour market conditions, reinforcing expectations of monetary easing—these signs of slowdown fuel investor appetite for safe-haven assets like gold.

"In the 12 months ending in March, the U.S. economy likely created 911,000 fewer jobs than previously estimated, the government said Tuesday, indicating that employment growth was already faltering before the strong import tariffs imposed by U.S. President Donald Trump," said Dr Renisha Chainani, Head - Research at Augmont.

5. Geopolitical tensions

Desai notes that tensions in the Middle East and Central Asia are also supporting gold, as geopolitical uncertainty traditionally drives investors toward safe assets.

6. Central bank buying

Kamboj stresses that the ongoing central bank stockpiling of gold has strengthened its safe-haven appeal and limited downside risks.

7. ETF inflows and investment-led buying

Despite record-high prices, investment demand has remained robust. Kamboj points to ETF inflows and investor trust in gold’s safe-haven role as key factors driving the rally.

8. Concerns about central bank independence

Desai mentions concerns about the independence of central banks, which are prompting investors to hedge with gold as a store of value.

9. Inflation data and monetary policy outlook

Investors are closely watching the upcoming U.S. producer price and consumer price inflation data. These reports will provide clearer signals on Fed policy, but the expectation of a dovish monetary stance continues to support gold for now.

Chainani said that for additional clues on the Federal Reserve's interest rate trajectory, attention will now turn to U.S. producer price inflation data, scheduled for release later today, and consumer price inflation data on Thursday.