Gold prices in India moved closer to the Rs 1 lakh mark on Thursday, as investors turned to the metal amid heightened geopolitical tensions and growing speculation of a U.S. interest rate cut. Spot gold rose 0.7% to $3,375.06 per ounce, while U.S. gold futures climbed 1.5% to $3,395 per ounce. A weakening dollar, which fell to a two-month low, added to gold’s appeal.
In the domestic market, 24-karat gold reached Rs 99,280 per 10 grams. Ongoing tensions in the Middle East, particularly involving U.S.-Iran relations and the possibility of Israeli military action, have strengthened gold’s position as a safe-haven asset.
U.S. inflation data released on Wednesday showed the Consumer Price Index rising just 0.1% in May, below the expected 0.2%. Annual inflation stood at 2.5%, reinforcing expectations that the Federal Reserve may begin cutting interest rates later this year. According to the CME FedWatch tool, traders are currently pricing in a 68% chance of a rate cut by September.
Manav Modi, Senior Analyst at Motilal Oswal Financial Services, noted that weaker-than-expected inflation data is fueling market confidence in a September rate cut. He added that rising geopolitical risks, including potential Israeli operations in Iran, are further supporting gold prices.
Aksha Kamboj, Vice President of the India Bullion and Jewellers Association, said gold’s recovery from recent lows has been driven by Middle East tensions and uncertainties around the U.S.-China trade agreement. She warned that if nuclear talks between the U.S. and Iran break down, prices could surge to record levels.
Analysts expect gold to remain strong, with market momentum supported by global risk factors and dovish monetary policy signals. As long as gold prices stay above key technical resistance levels, the outlook remains positive. The combination of geopolitical volatility and rate cut expectations continues to drive demand for the metal.
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