Gold Monthly for September 2025

August 2025 saw renewed strength in gold, with international prices rising 4.79% for the month and posting a robust 37.75% year-on-year gain. By the end of August, gold was trading at $3,448.50/oz, just below its all-time high. While prices touched $3,477.20/oz mid-month, they remained bound within a consolidation range after a surge earlier in the year.

Key drivers included expectations of a Federal Reserve rate cut in September 2025, a weaker U.S. dollar, and persistent geopolitical risks—the latter amplified by ongoing conflicts and no real breakthrough from high-level diplomatic summits. The gold price has remained relatively resilient, reflecting investor preference to hold gold in the current uncertain environment.

In India, local gold prices tracked global trends, rising 5.57% in August and surpassing ₹1,00,000 per 10 grams again. The Indian Rupee depreciated further as a fallout of adverse tariffs on India, amplifying gains for domestic investors and supporting increased demand of physical gold as retailers prepared for the festive season.

Outlook

Fundamentals remain highly supportive for a prolonged gold bull market, though volatility and headline shocks are likely as global conditions evolve.

We could be staring at a period during which the US economy is weak enough — as indicated primarily by labor market data — to prompt the Fed to ease monetary conditions at the same time as evidence is emerging that a major new inflation wave could potentially arise. This would be the ideal economic backdrop that could propel gold further.

Monetary Policy and Inflation

The market’s focus remains firmly on U.S. monetary policy. The expected rate cut in September 2025 could mark the beginning of a sustained easing cycle. Despite elevated inflation, the Fed is likely to prioritize employment and financial stability. This backdrop has been historically bullish for gold, as lower real interest rates increase the appeal of non-yielding assets.

However, the potential for inflation to surprise on the upside remains significant due to new tariffs, supply disruptions, and fiscal stimulus. If inflation accelerates while the Fed remains dovish, real yields could fall deeper into negative territory, further boosting gold as a store of value.

Yield Curve and Financial Conditions

In the near term, a continued steepening of the U.S. yield curve can be expected, where short-term rates decline more rapidly than long-term rates — a trend that typically supports gold prices. Looking ahead, if investor focus shifts from economic slowdown to concerns about rising inflation, long-term rates can climb faster. In both scenarios, gold’s outlook remains strong due to its role as both a safe-haven asset and a reliable safeguard against inflation.

Geopolitical and Policy Risks

Geopolitical tensions including the unresolved Russia–Ukraine conflict and shifting alliances following major summits continue to support a risk premium to gold. On the policy front, unprecedented political interventions into central bank independence (such as the recent dismissal of a Fed Governor) could drive episodic volatility, especially if monetary policy becomes more directly influenced by political actors. The unprecedented firing of Fed Governor Lisa Cook by President Trump raised serious concerns over central bank independence. Markets interpreted this move as a step toward a more politically influenced monetary policy.

Currency Trends and Global Demand

With political influence expanding at the Fed and rising deficits on the horizon, confidence in the U.S. dollar is waning. The USD’s status as the global reserve currency is facing long-term structural challenges. A declining dollar boosts gold demand.

With the U.S. dollar under ongoing pressure and still the Indian Rupee hit new lows pressured from the impact of 50% tariffs on India amidst slower growth, gold’s appeal as a store of value strengthens, especially in emerging markets.

Central Bank’s diversification into gold will continue

While central banks’ gold purchases slowed slightly in the first half of 2025, geopolitical instability and the drive for portfolio diversification remain powerful incentives for continued buying. According to the latest data by the World Gold Council, central bank’s buying moderated in the first half of calendar year 2025. Total gold acquisitions by central banks stood at 415 tonnes during this period, a decline from 524.8 tonnes recorded in the first half of 2024. Despite this short-term slowdown, prevailing geopolitical uncertainties may prompt central banks to reassess their reserve strategies. Any renewed shift in global reserves away from the U.S. dollar could sharply increase official-sector gold demand, supporting gold prices.

The looming global currency realignment and efforts by central banks to diversify reserves away from the dollar increase the structural, long-term demand for gold.

Conclusion

Despite brief periods of correction or consolidation, the gold market’s outlook remains overwhelmingly positive, the combination of easier monetary policy and a faster pace of commercial bank credit expansion via the proposed change in supplementary leverage should accelerate the pace of monetary inflation from its current low levels.

As the interplay of labor market weakness, monetary easing, currency pressure, and geopolitical risk unfolds, gold is likely to attract further inflows from investors, central banks, and increasingly risk-averse savers. The remainder of 2025 is poised to be shaped by dramatic policy moves and global instability—an environment in which gold has historically excelled.

Source: Bloomberg, World Gold Council

Above article is authored by Quantum.

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