Summary of this article
MCX Gold jumped 2.03 per cent to a record Rs 1,05,937 per 10 grams
MCX Silver zoomed 2.56 per cent to all-time high of Rs 1,24,990 per kg
Silver outperformed Gold over the past six months and one year
Gold and silver rallied to hit fresh new all-time highs on September 1, 2025, as investors turned to safe haven assets amid a mix of geopolitical events. On the Multi Commodity Exchange (MCX), Gold October futures jumped as much as 2.03 per cent or Rs 2,113 to an all-time high of Rs 1,05,937 per 10 grams, while on Comex, Gold December futures gained up to 1.07 per cent to $3,553.8 per ounce.
Meanwhile, Silver December futures zoomed up to 2.56 per cent or Rs 3,117 to a new record high of Rs 1,24,990 per kg on MCX. On Comex, Silver December futures rose 2.25 per cent or $0.92 to $41.64 per ounce.
Why Gold, Silver Prices Are Rising
Rising US Fed Rate Cut Expectations: Manav Modi, precious metals analyst, research, Motilal Oswal Financial Services said the rally in gold and silver prices came on the heels of “increasing rate cut expectations”. “Increased expectations of a US Federal Reserve interest rate cut this month lifted the bullion’s allure,” he said.
The CME FedWatch Tool shows markets are pricing in an 87–89 per cent probability of a 25 basis-point (bps) rate cut at the Fed’s September meeting.
Renewed Israel-Gaza Conflict: The renewed conflict in Gaza has increased geopolitical risks, which in turn, has also increased the demand for safe haven assets. “Along with increasing rate cut expectations, tensions between Israel and Gaza and other geo-political tensions and the tariff escalations are continuously supporting buying in bullions,” said Modi.
The Israeli Military had announced on August 31, that a spokesperson for Hamas’ armed wing, Abu Obeida, was killed in Gaza over the weekend. At least 43 Palestinians were killed since Saturday, most of them in Gaza City, according to local reports.
Tariff Escalations: As India and the US are in a deadlock over agreement over an amicable trade deal, several US officials over the weekend launched attacks on India as part of their negotiation tactics, putting pressure to stop purchasing oil and weapons from Russia.
After the additional “punitive” 25 per cent tariff on Indian goods came into effect on August 27, India faces total 50 per cent tariffs from the US. Amid this tariff shock, India is currently gravitating towards its neighbour China and is long-standing ally Russia. This is emerging into a US versus Russia–China–India bloc dynamic, raising concerns over geopolitical stability, which in turn, is driving demand for bullions.
Legal Deadlock Over Fed Governor Lisa Cook’s Dismissal: A two-hour hearing took place in Washington DC on August 29 before the US District Judge Jia Cobb over the dismissal of Fed Governor Lisa Cook. Judge Cobb did not give a verdict and said the case raises “important questions … as it relates to the President’s firing of a Fed governor.”
President Trump argued that Cook should not return to the Fed, pointing to alleged mortgage fraud as the reason for her removal. Cook has sued back, asking for a temporary restraining order to hold her seat, saying the dismissal is legally unsound and politically motivated.
"Markets were rattled by a high-stakes federal court hearing in which Trump urged a judge to block Fed Governor Lisa Cook’s appeal to remain on the Federal Reserve Board, a case that raises serious questions about the Fed’s independence. The hearing concluded without a ruling, intensifying investor anxiety,” said Kaynat Chainwala, assistant vice president - commodity research, Kotak Securities.
Iran Sanctions: Fresh warnings from the United Kingdom (UK), France, and Germany over Iran’s nuclear activity and calls for secondary sanctions on countries backing Russia, have further amplified demand for precious metals, said Chainwala.
Meanwhile, Tehran condemned the move and warned of consequences if sanctions are reimposed.
Weakening Dollar, Indian Rupee: US Fed Chair Jerome Powell, while speaking at the annual three-day event at Jackson Hole last week in Wyoming, hinted at a potential rate cut in September. “With policy in restrictive territory, the baseline outlook and the shifting balance of risks may warrant adjusting our policy stance,” Powell had said on August 22.
As a result of Powell’s dovish speech, the dollar has been weakening. The US Dollar index, which measures the value of the dollar against six major currencies, has slipped more than 1 per cent over the week to a trade at an intraday low of 97.47.
Prathamesh Mallya, deputy vice president research – non-agri commodities & currencies at Angel One, said gold usually benefits when the dollar weakens, as the two share an inverse correlation.
Trump’s Persistent Pressure: Market participants are also priced in on US President Donald Trump’s persistent pressure on Powell to cut rates.
The US core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation gauge, rose 2.90 per cent in July on an annual basis, according to US Department of Commerce data released on August 29, suggesting the impact of tariffs is beginning to show.
However, US consumer spending rose 0.30 per cent in July, the biggest gain in four months, indicating persistent consumer demand despite rising inflationary pressures, according to the Bureau of Economic Analysis data released on August 29.
Modi said that, while strong US consumer spending and the PCE inflation data signal economic resilience, Trump’s increasing pressure on Fed officials is “continuously increasing rate cut expectations for September.
Festive Demand, Strong ETF Inflows: Strong demand for gold and silver ahead of the festive and wedding season domestically, and strong inflows into gold exchange traded funds (ETFs) are also supporting the prices of the precious metals.
Silver Outperforms Gold
According to GoldPrice.org, gold has rallied 19.25 per cent over the past six months and over 38 per cent in the past one year.
Meanwhile, silver has rallied 25.40 per cent over the past six months and around 39.35 per cent over the past year, clearly outperforming the yellow metal.
Gold, Silver Outlook: What Should Investors Do
Gold and silver are likely to remain in focus this week, as investors weigh rate cut expectations, US jobs data, and rising political tensions.
Chainwala said, “Looking ahead, investors will be closely watching for signs of monetary policy shifts and political escalation. With the Fed signalling a growing willingness to cut rates, underscored by recent comments from San Francisco Fed President Mary Daly and Governor Christopher Waller, expectations are mounting for a September rate cut.”
She pointed out that the uncertainty around the US trade policy and the pending court decision on Fed Governor Lisa Cook are also keeping markets nervous.
“A US court ruling has already declared Trump’s trade tariffs illegal, and a decision on Lisa Cook’s role at the Fed is not expected before at least Tuesday, both of which could continue to stoke market volatility,” she added.
The upcoming August jobs report will also be a key data to watch. “Fed Chair Powell has recently flagged growing risks to the labour market, making this week’s August jobs report particularly important. Any signs of softness in the upcoming August jobs report could cement the case for easing,” Chainwala said.
According to Bloomberg, only 75,000 jobs were likely added in August. Market participants will closely track the Bureau of Labor Statistics’ annual payroll benchmark revision set to release on September 9.
Chainwala added: “A substantial downward revision would suggest that job creation over the past year has been overstated, potentially reshaping the Fed’s assessment of labour market resilience. Such a shift could strengthen the case for deeper rate cuts, potentially fuelling an extended rally in bullion.”
At the same time, she warned that traders should not get complacent. “Price action remains highly data and event dependent, and any unexpected developments could lead to a sharp pullback,” she added.
