MUMBAI, October 2, 2025 – India’s gold market experienced a sharp India gold price surge on Wednesday when 24-carat gold hit a record high of Rs 1,19,240 per 10 grams, up Rs 1,800 from the previous day. This rally, driven by bets on US Federal Reserve rate cuts and uncertainty over a US government shutdown, saw trading volumes soar on the Multi Commodity Exchange of India (MCX). The surge reflects safe-haven buying amid global economic jitters, with spot gold globally touching $3,895.09 per ounce. Investors now eye sustained momentum as India’s festive demand kicks in.
Why This India Gold Price Surge Matters for South Asia
Gold holds deep cultural and economic significance in South Asia, where India accounts for over 25% of global demand. This India gold hits record high US rate cut uncertainty 2025 event strains import bills, potentially widening India’s current account deficit by 0.5% of GDP if prices hold above Rs 1,18,000 per 10 grams. For neighbouring countries like Pakistan and Bangladesh, higher global rates ripple through remittance-financed jewellery purchases, boosting regional trade but inflating household costs. Central banks across the region, including the State Bank of Pakistan, may accelerate gold reserves to hedge inflation, stabilising currencies yet diverting funds from infrastructure. In a year of geopolitical tensions, this surge underscores gold’s role as a regional bulwark against dollar volatility.
India Gold Hits Record High on Global Uncertainty
The India gold price surge peaked on October 1, 2025, when MCX futures for December delivery climbed 1.51% to Rs 1,19,240 per 10 grams for 24-carat gold. This marked the highest level since MCX’s inception in 2003. On Thursday, prices eased slightly to Rs 1,18,690 per 10 grams, down Rs 550, yet remained 44% higher year-to-date. Globally, spot gold reached $3,895.09 per ounce, a 0.8% gain, before settling at $3,871.99 by 4:35 PM IST.
Traders attribute the India gold hits record high US rate cut uncertainty 2025 to a confluence of factors. Weak US private payrolls fell 32,000 in September, reviving expectations of a 25 basis-point Federal Reserve cut this month. CME FedWatch Tool data shows a 99% probability. Compounding this, the US Congress failed to avert a government shutdown, delaying key economic reports and eroding dollar strength by 0.3%.
In India, the rupee weakened 0.2% to 84.15 against the dollar, amplifying domestic price gains. MCX recorded turnover of Rs 14,471 crore in Gold Mini contracts on September 30, the highest ever, with open interest at 256 kg for Gold Ten. This volume surge signals robust investor participation amid the India gold price surge.
Edward Meir, analyst at Marex, noted the mood shift. “The dollar has been under pressure because, usually, when the government shuts down, the mood turns quite negative on the US.” He added that softer jobs data bolsters gold’s appeal in a slowing economy.
US Rate Cut Bets Drive 2025 Momentum
The India gold hits record high US rate cut uncertainty 2025 stems from broader 2025 trends. Year-to-date, domestic prices rose 44%, outpacing global gains of 40% as per LBMA Gold Price PM data through September 15. A 3% rupee depreciation since January exacerbated the climb.
Central banks fuel this. The Reserve Bank of India (RBI) holds 880 tonnes of gold reserves, up from 822 tonnes a year ago, comprising 12.5% of forex reserves valued at a 40% premium due to elevated prices. RBI paused purchases in August, acquiring just 3.8 tonnes from January to August, down from 45.4 tonnes last year. Yet, the bank’s recent amendment to gold lending rules, effective October 1, eases collateral valuation for banks, potentially unlocking Rs 50,000 crore in fresh loans.
Investor sentiment remains bullish. India’s gold exchange-traded funds (ETFs) saw net inflows of INR 21.9 billion in August, a 74% month-on-month jump, pushing assets under management to INR 724 billion and holdings to 70 tonnes. New folios surged 24% to 8.03 million since January. A new ETF launch by Angel One in August brought the total to 22 products.
Shaokai Fan, World Gold Council Head of Asia Pacific and Global Head of Central Banks, highlighted the appeal. “There’s still a lot of interest in moving into gold, and gold can play a very important role in helping investors navigate these uncertain times.”
Regional Trading Volumes Reflect Surge
MCX data underscores the frenzy. Bullion futures hit all-time highs on September 30, with Gold Guinea turnover at Rs 321 crore and Gold Petal open interest at 264 kg. Silver Mini options reached 346 metric tonnes in open interest on September 23. These figures, up 20% from August averages, indicate speculative positioning amid the India gold price surge.
Gold imports hit a nine-month peak of 60-65 tonnes in August, valued at US$5.2 billion, a 37% rise from July. This pre-festive stockpiling by bullion dealers anticipates demand spikes during Diwali and Dussehra.
Expert Forecasts Amid India Gold Price Surge
Analysts see upside risks. Goldman Sachs projects $4,000 per ounce by mid-2026 and $4,300 by December 2026, citing ETF holdings at 1,018.89 tonnes—the highest since July 2022—and speculative net-long positions. SP Angel analysts predict a break above $4,000 if Western ‘FOMO’ persists. “We are now seeing increased appetite from Western investors, both institutional and retail.”
In India, the World Gold Council anticipates stronger Q3 demand, potentially 600-700 tonnes for the year despite high prices curbing jewellery sales. Festive prep has shifted buyers to bars and coins, with high-value wedding purchases holding steady. A GST rate cut on consumer goods from September 22 could add 5-10% to volumes.
Matt Simpson, senior analyst at City Index, links the rally to policy bets. “Weak ADP employment data ahead of the non-farm payrolls report has revived Fed rate-cut bets to weaken the US dollar.” He notes futures positioning shows managers chasing highs without extremes.
Background: From Q2 Strength to Festive Build-Up
India’s gold demand totalled 1,249 tonnes in Q2 2025, up 3% year-on-year, with value terms jumping 45% to reflect price gains. Investment bars and coins led at 28% growth, while jewellery dipped 2% due to cost pressures. RBI’s strategic buys earlier in the year, totalling 77 tonnes from January to October in prior cycles, signal diversification from US treasuries.
The rupee’s volatility, down 4% against the dollar in 2025, has widened the premium over international prices. Domestic discounts narrowed to marginal premiums in late August, aiding exporters but squeezing importers.
What’s Next for India Gold Hits Record High
Looking ahead, the October-December peak season could push demand 15% higher if prices stabilise below Rs 1,20,000. Geopolitical flares, like Middle East tensions, may accelerate central bank buys. RBI’s next policy review on October 7 could signal reserve adjustments. Investors monitor US non-farm payrolls, delayed by shutdown, for fresh rate cut clues.
As the India gold price surge persists into late 2025, it cements gold’s status as South Asia’s premier hedge, with traders bracing for volatility that could redefine festive fortunes.
Published in SouthAsianDesk, October 2nd, 2025
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