Has Gold Reached a Record High and Is It Poised for Its Best Month in 14 Years?
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Synopsis
Gold prices have reached new heights, tracking for the most substantial monthly increase in 14 years. With fears of a US government shutdown and expectations of Federal Reserve rate cuts looming, investors are keenly watching the market. What does this mean for the future of gold?
Key Takeaways
- Gold prices hit a record high of Rs 1,15,450.
- September marks a potential 11.4% increase in gold prices.
- US gold futures rose by 0.4% to $3,872.
- The likelihood of a 25-basis-point cut by the Federal Reserve is at 89%.
- Gold has outperformed equities in seven of the last eight years.
Mumbai, Sep 30 (NationPress) The price of gold has soared to an unprecedented high on Tuesday, setting the stage for its most significant monthly increase in 14 years as worries about a potential US government shutdown mount, along with growing expectations for additional rate cuts by the Federal Reserve.
In September alone, the price of the yellow metal has surged by 11.4%, making it on track for its best month since August 2011, when it jumped by 15% due to increased demand for safe haven assets.
The cost of 24-carat gold (10 grams) reached a new record of Rs 1,15,450 on Tuesday, as per data released by the India Bullion and Jewellers Association (IBJA).
US gold futures for December delivery also saw an increase of 0.4%, reaching $3,872. Tensions between US President Donald Trump and his Democratic counterparts seem to make little headway during a White House meeting focused on preventing a government shutdown that could disrupt numerous services starting as early as Wednesday.
The US Labour Department declared that it would suspend economic data releases, including the September jobs report, if a partial government shutdown occurs, thereby closing its statistics agency.
Recent data has heightened expectations for further easing measures by the Federal Reserve.
Traders are anticipating an 89% probability of a 25-basis-point rate cut at the next Federal Reserve meeting, according to the CME Group’s FedWatch tool.
St. Louis Federal Reserve President Alberto Musalem expressed openness to additional rate cuts but emphasized the need for caution, suggesting that rates must remain sufficiently high to combat inflation.
Gold has consistently outperformed Indian equities for the fourth year in a row during the Diwali-to-Diwali period, continuing a trend where the yellow metal has outpaced equities in seven of the last eight years.
Silver has also outshined Indian equities for the third consecutive year, driven by strong industrial demand related to solar panel production, semiconductors, and electric vehicles.
Furthermore, analysts indicate that bullion continues to benefit from robust purchases by central banks and sustained inflows into ETFs. The cautious tone from the Fed Chair regarding inflation, the labor market, and future rate adjustments could potentially limit bullion's gains.
Investors are eagerly awaiting US data regarding job openings, private payrolls, the ISM manufacturing index, and Friday’s non-farm payrolls report for insights into the economy's future trajectory.
Point of View
I emphasize the importance of understanding the dynamics influencing gold prices. The market is reacting to the looming threat of a government shutdown and potential interest rate cuts, which could significantly impact investments. It's crucial for our readers to stay informed and prepared in these uncertain times.
NationPress
30/09/2025
Frequently Asked Questions
What factors are driving the rise in gold prices?
The rise in gold prices is primarily driven by concerns over a potential US government shutdown, increasing demand for safe haven assets, and expectations of further Federal Reserve rate cuts.
How has gold performed compared to equities?
Gold has outperformed Indian equities for the fourth consecutive Diwali-to-Diwali cycle, indicating its strength as an investment during uncertain economic times.
What are the current expectations for Federal Reserve rate cuts?
Traders are currently pricing an 89% likelihood of a 25-basis-point cut at the upcoming Federal Reserve meeting, reflecting a strong belief in further easing measures.
