Gold's Record Rally: A Dollar's Decline Fuels a Bullion Revolution

Gold prices surged to a record high of $3,655.50 per ounce, driven by mounting expectations for Federal Reserve rate cuts and a weakening U.S. dollar. Spot gold hovered near $3,586 per ounce, while futures prices climbed above $3,650, reflecting intensified investor momentum amid soft U.S. labor data and dovish policy forecasts. The rally, which has delivered a 36% year-to-date gain, was further fueled by a 4% surge in the first week of September, setting the stage for potential further gains before the end of 2025 [2].

Key catalysts for the move included the August Nonfarm Payrolls report, which showed only 22,000 jobs added—far below the expected 75,000—alongside a rise in unemployment to 4.3%, the highest since 2021. Jobless claims also rose to 237,000, contributing to a sharp drop in Treasury yields and the U.S. Dollar Index to 97.70. These developments heightened market expectations for a 25-basis-point rate cut at the September 17 FOMC meeting, with speculation growing around a larger 50-basis-point cut. The CME FedWatch tool currently shows a 99.4% probability of easing at the next meeting [2].

Technical analysis supports the bullish trajectory, with gold rebounding from the 100-week simple moving average (SMA) and maintaining a strong defense at the $3,500 level. Futures prices, currently at $3,653.30 per ounce, confirm the continued optimism among market participants. Analysts suggest a potential path toward $3,800 in the fourth quarter, with the $4,000 level becoming a realistic target if dovish central bank policy aligns with strong seasonal demand [2].

Global demand for gold is also on the rise. Institutional investors continue to accumulate, with global ETFs seeing $5.5 billion in inflows during August 2025. Central banks have been particularly active, with over 1,000 tons of gold purchased in 2024, and further large-scale accumulation anticipated in the coming months. Meanwhile, physical demand in Asia has shown some hesitation as buyers in India and China have pulled back above $3,550, though festive season demand from Navratri to Diwali is expected to boost consumption and keep premiums elevated [2].

In domestic markets, India and the UAE are experiencing historic price levels. In India, 24-carat gold reached ₹108,490 per 10 grams, with 22-carat trading near ₹99,450 per 10 grams. On the MCX, October futures hit a record close of ₹107,740 per 10 grams, reflecting heightened demand ahead of key festive periods. In the UAE, 22K gold surged to Dh400 per gram, the highest in history, while spot prices remained at $3,586 per ounce, indicating continued consumer pressure despite elevated costs [2].

Market observers remain cautious about short-term volatility, with technical indicators suggesting the possibility of a pullback toward $3,500–$3,520 as gold trades in an overbought zone. However, analysts widely expect any dips to be met with buying interest, particularly amid ongoing geopolitical tensions and the likelihood of Fed easing. Looking ahead, key economic data such as U.S. inflation reports, particularly core CPI, and the European Central Bank’s policy decision will play a pivotal role in shaping gold’s trajectory. Meanwhile, seasonal demand and global macroeconomic factors continue to provide a supportive backdrop for the precious metal [2].

Source:

[1] XAU/USD | Gold Spot US Dollar Price (https://www.investing.com/currencies/xau-usd)

[2] Gold Price Forecast: Will XAU/USD Hit $4,000 in 2025? (https://www.tradingnews.com/news/gold-price-forecast-fed-cuts-in-focus-xau-usd-stays-near-3586-usd)