All That Glitters, Is Now Gold!

17th September was very important for Gold. Why? It was the Fed policy, that gave markets exactly what they wanted. Markets had already priced in 25bps of rate cuts from the Fed and this probably explained why both US equity markets and Gold barely witnessed a reaction post a dovish Fed policy. The Fed policy indicated two more rate cuts for 2025 and four more into 2026. And this, for now, tells us that Gold has probably entered its fifth phase of price appreciation. However, one must remember that macros are very dynamic, and markets are constantly reevaluating their thesis with every macro data release. Therefore, any change in the Fed views or any strong risk-on moves in equities could, over the course, have some moderating impact on gold appreciation.

- By Mr. Arjun Nagarajan, Chief Economist -Sundaram Mutual Find

Two key drivers for Gold

Gold prices are up more than 12% from mid-Aug'25. This was largely due to market expectations of a probable structural rally in gold again. One can simplify and breakdown the drivers of gold into two:

1. Uncertainty: Anything that causes a sense of uncertainty like wars, tariffs, recessions (also sharp inflation) tend to give strength to gold.

2. Fed rate cuts (structural of sorts): Once rate cuts begin, they go on for a while before they end, unlike war and tariff related uncertainties. And therefore, Fed rate cuts have always led to strength in Gold.

The last four rallies in Gold