Informist, Tuesday, Sept. 2, 2025

MUMBAI – Gold prices are expected to increase further in the medium term as concerns about the US institutional framework are expected to remain in place, ICICI Bank Global Markets said in a report. The US Federal Open Market Committee's policy easing will also provide support to gold prices, reflecting the longer-term inverse relationship between gold and US real rates, as per the report. ICICI Bank has retained its "medium-term bullish bias" for gold for the remainder of 2025.

Global gold prices are expected to move in a range of $3,400 per ounce and $3,600 per ounce over the remainder of 2025, and between $3,600 and $3,800 per ounce in the first half of 2026. If there is an escalation in geopolitical tensions, the range could be higher, the bank said.

The US FOMC is expected to embark on a prolonged easing cycle over 2025 and 2026, which should support gold prices from a cyclical perspective. "We see 125 bps (basis points) easing by the Fed over 2025 and 2026," ICICI Bank said. Additionally, reserve diversification into gold and away from the dollar is expected to be a continuing theme.

Domestic gold prices are expected to increase further in the medium term, tracking the rise in global prices of gold and a fall in the rupee against the dollar. Gold is expected to move in a range of INR 99,500 per 10 grams and INR 110,000 per 10 grams over the remainder of 2025 and in the range of INR 110,000 per 10 grams to INR 125,000 per 10 grams in the first half of 2026, according to ICICI Bank.

"Risks to these projections are to the upside if the INR (rupee) trades at a much depreciated level against the USD (dollar) than our projections," the bank said in its report. "We have assumed an average range of 87.00-89.00 for the USD/INR pair for the period. However, the asymmetrically higher tariff that has been imposed on India could leave the INR vulnerable to depreciation pressures that could in turn work as a source of upside for local gold prices."

Global gold prices have increased 4% in August from the previous month and 33% over 2025 due to rising expectations of a Fed rate cut and growing concern about the US central bank's independence. Domestic gold prices rose 6% over last month, driven by the rise in global prices and the fall in the rupee against the dollar. At 1918 IST, the most-active December gold contract on COMEX was 0.9% higher at $3,548.7 per ounce. The most-active October gold contract on the MCX was up 0.2% at INR 104,961 per 10 grams. End

US$1 = INR 88.15

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Reported by Reshma Ravi

Edited by Rajeev Pai

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