Gold at all-time high level: 5 factors driving the surge

Gold prices climbed to an all-time high of $3,698 per ounce, with Indian rates hovering at ₹1,09,511 per 10 grams. The surge reflects a mix of macroeconomic, political, and domestic factors, say experts.

Weak dollar and lower yields

According to Manav Modi, Analyst – Precious Metal Research, Motilal Oswal Financial Services, gold’s rally is being powered by currency and bond markets.

“Gold prices scaled a record peak, supported by a weaker dollar and US yields ahead of the Federal Reserve's policy meeting this week, where the central bank is widely expected to cut borrowing rates,” he said.

The dollar is trading at a 2-1/2-month low against the euro, while US yields are hovering near 4%.

Fed policy expectations

Markets are pricing in a 25 bps rate cut after a long pause.

“Along with Governor Powell’s statement, dot plot and economic forecasts will also be important to watch for,” Modi noted.

Political commentary is adding to the pressure — US President Donald Trump has urged the Fed to deliver a “bigger” cut.

Geopolitical tensions

The conflict in the Middle East remains another key driver. The Israeli military launched a ground offensive in Gaza City, intensifying risks around oil supply chains. Rising geopolitical uncertainty has historically supported safe-haven flows into gold.

Domestic drivers: Rupee and festive demand

In India, the rally has been sharper due to the depreciating rupee, which raises import costs.

Mohit Kamboj, Former President of IBJA and CEO of Aspect Global Ventures, said investors are viewing gold as a hedge.

“From a business and investment perspective, this price suggests gold is a risk hedge with value retention. However, once gold prices exceed ₹1.10 lakh per 10 grams and particularly due to festivals and weddings, we must anticipate potential profit-booking opportunities,” he said.