Gold Monthly for October 2025

After breaking out of a consolidation phase in August, gold demonstrated strong upward momentum in September. International Gold prices surged by 11.7%, reaching new all-time highs during the month. On September 30, gold ended at $3,806.5 per troy ounce, marking a month-on-month increase of roughly $399. This rally brought gold to its highest price ever, supported by robust global demand and pronounced investment flows.

The performance was largely driven by the Federal Reserve’s 25 basis point rate cut, accelerating US inflation, President Trump’s tariff announcements, and mounting evidence of labour market weakness in the United States. While many of these developments were widely anticipated, their broad-based and persistent impact on gold prices was particularly evident throughout the month.

In India, gold prices surged to a new all-time high reaching ₹120,000 per 10 grams in late September, just before the start of the festive and wedding season. The rally domestically was further amplified by the sharp depreciation of the Indian rupee, which fell to a record low of 88.79 against the US dollar—a depreciation of about 1.1% month-on-month based on August-end levels. This currency moves significantly intensified the rupee-denominated gains for gold investors in India, marking an increase of nearly 14% for the month.

Outlook

The demand for gold as a preferred asset is expected to remain strong amid ongoing structural financial challenges in the United States and continued unconventional policymaking, which is accelerating financial market uncertainty. Furthermore, the key factors that have propelled gold to new highs appear to be firmly in place, suggesting continued upward pressure on prices and providing critical support in the near to medium term.

Federal Reserve and Monetary Policy

The Federal Reserve announced a 25-basis point rate cut in the third week of September. While the cut itself was widely anticipated, the final decision came after debate within the FOMC over the size of the reduction. The committee ultimately opted for the more moderate adjustment. Chair Jerome Powell signalled the possibility of a more aggressive easing path, indicating two additional rate cuts could follow later this year in response to a weakening labour market despite rising inflationary pressures. Although the decision was framed as a risk management measure. Rising federal debt and widening fiscal deficits continue to underpin gold as a hedge against deteriorating US macro fundamentals. Should labour market data deteriorate further or any signs of financial market stress intensifying, the Federal Reserve could be compelled to implement a more aggressive rate cut or easing measures, which would likely provide an additional boost to gold prices

Inflation and Labor Market

The macroeconomic impact of the Trump-era tariffs had long been anticipated, and their effects have now begun to materialize, with inflation ticking up to 2.9%. In response, the Federal Reserve has revised its inflation outlook slightly upward from previous projections, acknowledging the real economic implications of these tariffs and broader trade policies. Conversely, labour market data has shown signs of weakness. Only 22,000 new jobs were added in August, significantly below the consensus estimate of 75,000. Additionally, the Bureau of Labor Statistics revised previous months' figures downward, which has led to questions on credibility of data being rolled out.

After the negative surprises/revisions of the past two months, the average forecast for the next employment report stands at 45,000, reflecting much muted expectations now. However, there is still scope for the reported number to surprise on the downside. The reported number could be lower, in which case the financial markets will begin to discount a 0.50% Fed rate cut in the next meeting. Conversely, a significant better jobs number could surprise the street and prop up the dollar in the near term and could impact rate sensitives and gold adversely. The job number probably is bound to create much volatility in the coming days.

This combination of rising inflation and a weakening labor market has sharpened recession fears and contributed to a steepening yield curve, fostering a fundamentally supportive backdrop for gold.

Demand and Indian Season

Global demand for gold continues to remain resilient, supported by sustained interest from both institutional and retail investors. In August alone, gold-backed Exchange Traded Funds (ETFs) recorded net inflows of approximately $5.5 billion, reflecting renewed investor confidence in gold as a strategic asset class amid rising economic uncertainty. In India, the approaching festive and wedding season is likely to further bolster retail demand for gold. Traditionally a period of heightened gold purchases, this seasonal trend may be reinforced by increased financial awareness and the growing popularity of gold Funds among Indian investors. The steady inflows into these investment vehicles indicate a clear shift in sentiment, as investors increasingly view gold not just as a store of value, but also as a viable investment option.

Conclusion

The latest tariff announcements by President Trump—involving 100% tariffs on imported branded drugs, 25% on heavy-duty trucks, and 30-50% on select furniture—will intensify stagflationary pressures and weigh on US corporate earnings. In summary, the US macroeconomic landscape presents a textbook case for continued gold strength: amidst the backdrop of structural fiscal woes - persistent inflation, the prospect of further Fed rate cuts, a softening labour market, and heightened policy and geopolitical risk all argue for a sustained bull market in gold to continue.

Data Source: Word Gold Council, Reserve Bank Of India

Above article is authored by Quantum.

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