Global Gold Prices Rise on Weak Dollar as Markets Await US Fed Decision

Global gold prices edged higher on Tuesday as investors moved toward safe-haven assets amid heightened caution ahead of the US Federal Reserve’s upcoming interest-rate decision. The rise in bullion was supported by a weaker US dollar, which typically makes gold cheaper for holders of other currencies, thereby boosting global demand. According to early market reports, the yellow metal climbed for a second consecutive session, signalling a shift toward risk-off sentiment across major financial markets.

Analysts note that, in the lead-up to the Fed’s policy announcement, investors are positioning themselves cautiously. While the Fed is widely expected to maintain its current stance on interest rates, markets remain highly sensitive to signals on future monetary easing. Any indication of rate cuts in early 2026 could further strengthen gold prices, given the inverse relationship between US interest rates and non-yielding assets like gold. The volatility in bond yields and geopolitical uncertainties have also contributed to renewed investor interest in safe-haven metals.

The dollar index weakened slightly ahead of the policy meeting, reinforcing gold’s upward movement. Currency strategists attribute the dollar’s dip to profit-booking and expectations that the Fed may adopt a more dovish tone amid signs of slowing US economic activity. As a result, spot gold prices rose in global markets, while futures registered moderate gains, reflecting bullish sentiment among traders.

Impact on India

For India — one of the world’s largest consumers and importers of gold — the global uptick carries significant macroeconomic implications. A rise in international gold prices directly affects India’s import bill, increasing pressure on the trade deficit. Higher gold imports often widen the current account deficit, especially during festival and wedding seasons when domestic demand peaks.

Additionally, costlier gold can influence inflation trends in the country. While gold is not part of the Consumer Price Index (CPI) basket, its demand affects liquidity and household savings behaviour. Economists point out that rising gold prices may also strengthen retail investment in gold ETFs and sovereign gold bonds, as investors look for safe assets amid global uncertainty.

With the rupee remaining sensitive to global currency movements, further weakening of the US dollar may provide temporary support. However, policymakers will keep a close watch on gold-price volatility as global markets brace for the Fed’s policy direction.