Gold returns to ₹1-lakh glitter: What is driving the rebound?

Gold prices in India hit a record ₹1,00,245 per 10 grams in Ahmedabad on Thursday. Investors were seen scurrying towards the yellow metal after the US Federal Reserve kept the interest rates unchanged amid a cautious stance over the economic outlook.

Traditionally, gold tends to perform well in low-interest rate regime.

Globally, gold is trading at all-time highs, with MCX gold at ₹97,090 in the previous closing session. International gold prices stand at $3342 per ounce as of 14:00 PM (IST).

On the Fed stance, Kama Jewellery MD Colin Shah, said, "The decision of the US Fed to keep the interest rates unchanged comes following the global uncertainty caused by the escalating trade war, a slowdown in the economic growth in the US, and volatile inflation trends. While the inflation may appear to have cooled down and the growth looks robust, this still does not warrant a rate cut as the risks of uncertainty regarding the economic outlook loom large. Hence, the Fed Chair will evaluate the data after the 90-day pause period to decide about the future rate cuts."

An Augmont report, too, shared similar views. "Due to increased geopolitical tensions in the Middle East, Eastern Europe, and India-Pakistan, as well as ongoing market uncertainty over U.S. trade policies, gold is up 2% on the week."

Shah expects gold prices to be elevated with mild volatility in the price trajectory due to the ongoing trade war between US-China and other geopolitical tensions. “Prices could hover in the range of ₹96,000 to 97,000/10 gms in the domestic market and USD 3400 to 3500/Oz in the international markets in the near term," he added.

Notably, ahead of a planned meeting between the U.S. and Chinese officials in Switzerland, President Trump said he would not consider lowering the U.S.'s 145% tariffs on China to advance trade-war negotiations with Beijing, stifling hopes for a breakthrough.

The Federal Reserve reaffirmed its cautious approach on future rate changes by warning of growing inflation and unemployment risks and holding its benchmark interest rate constant as anticipated, which put pressure on gold. In addition, Fed Chair Jerome Powell stated that the central bank is not contemplating a proactive rate reduction in reaction to the possible economic consequences of Trump's tariffs.