The Indian rupee remained weaker than 88 per USD, continuously resting record lows of 88.4 since the start of September on the outlook of limited foreign exchange inflows and a dovish RBI. The US maintained its 50% tariff on India and threatened to double the current rate, pleading G7 countries to join, as India continued to import oil and fuels from Russia. This was after PM Modi pushed back and stated that Indian firms buy the most favorable energy in an uncertain economic backdrop. On the monetary policy front, consumer inflation was at 2.1% in August, remaining close to the lower bound of the RBI's inflation tolerance band of 2%. The central bank held rates unchanged in its August meeting and is largely expected to hold on their upcoming October meeting, but the softer inflationary backdrop and growth concerns stemmed from trade restrictions supported the case for another cut this year or next.
Gold prices climbed to an all-time high of $3,710 per ounce on Monday, with investors looking ahead to key US inflation data and comments from several Federal Reserve officials this week for further policy guidance. Last week, the Fed delivered its first rate cut of the year and signaled further reductions ahead as the labour market weakens. Markets currently imply two more 25-basis-point reductions at the Fed’s final meetings of the year—in October and December—with expectations of continued monetary easing providing a major boost to bullion’s 40% surge so far this year. Gold has also been supported by safe-haven demand amid ongoing geopolitical tensions and concerns over the economic impact of President Donald Trump’s tariffs, alongside robust central bank buying and sustained ETF inflows.
