Gold Price: How Rupee vs Dollar Moves Drive The Precious Metal in India

Gold (XAU) prices in India rise when the Indian rupee (INR) weakens against the US dollar (USD), even if international bullion markets stay flat. The reason is simple: India is a net importer of gold, and nearly every ounce consumed is paid for in dollars.

Let’s examine gold’s correlation with INR in detail.

Rupee vs. Dollar Impact on Gold: Detailed Outlook

India consumes 700–900 tonnes of gold a year, but produces barely 1–2 tonnes. The shortfall is filled through imports.

According to commerce ministry data, gold imports in FY 2024–25 touched $58 billion, up 27% from $45.5 billion the year before, making it one of India’s largest import items after crude oil and electronics.

Because these imports are dollar-denominated, the USD/INR exchange rate directly shapes local prices.

A weaker rupee, for instance, makes imported gold more expensive; a stronger rupee brings relief. The five-year chart below shows this clearly.

Gold in US dollar terms (XAU/USD; red) rose about 71.6%, while gold in Indian rupees (XAU/INR, purple) climbed nearly 100% in the past five years.

Over the same period, the rupee lost about 16.5% against the dollar (USD/INR; green).

The result: domestic gold prices outpaced global prices because of currency weakness.

How Does Gold Price Impact Demand in India?

When the rupee weakens, jewelry demand tends to soften, though weddings and festivals still drive purchases. Investment demand, however, often rises, as households use gold to protect against inflation and currency depreciation.

On the other hand, a stronger rupee makes imports cheaper, encouraging jewelers to stock up and giving consumers steadier prices.

Recent data underlines this connection:

• FY 2024–25: Imports surged to $58 billion, widening the trade deficit.
• June 2025: Imports fell to a five-year low of 204 tonnes ($1.84 billion) as high prices curbed demand.
• July 2025: Imports rebounded to $4 billion (42–48 tonnes) ahead of the festive season.
• July 2025: Gold ETFs recorded a 14% jump in holdings year-to-date, with over $1.10 billion in inflows.

Policy changes have also shaped flows.

When the government cut the import duty from 15% to 6% in 2025, official imports rose 8% year-on-year as smuggling slowed. The duty cut narrowed the global–domestic price gap, but the rupee-dollar exchange rate remained the key factor determining local prices.

Multi-Commodity Exchange’s Key Role: Why MCX Gold Price Today Matters?

For Indian buyers, the MCX gold price today is the most direct gauge of gold in INR. Since contracts are quoted in rupees, they capture both global bullion moves and the rupee–dollar exchange rate.

That’s why MCX prices often diverge from the global XAU/USD chart. A weaker rupee makes MCX gold rise faster than international benchmarks, while a stronger rupee cushions local buyers.

The chart shows this clearly. As of August, XAU/USD gained about 25% year-to-date, but XAU/INR and MCX gold rose closer to 30%.

The difference comes from currency depreciation. Even with flat global prices, MCX contracts climb if USD/INR moves higher.

For households, traders, and policymakers, this makes the MCX ticker the daily benchmark, reflecting India’s currency outlook and import costs.

Gold Price Prediction 2025: Are MCX Gold INR Forecasts Any Bullish?

As noted, Gold’s price and MCX Gold rates in India highly depends on how rupee vs. dollar performs.

USD/INR Outlook: Consensus Favors Weaker Rupee vs. Dollar

Most forecasts suggest the rupee will face modest depreciation through late 2025, keeping upward pressure on MCX gold.

MUFG’s rupee vs. dollar forecast is bearish, seeing USD/INR climbing toward ₹88.50 by year-end, citing persistent external deficits and reduced central bank support.

NAGA offers a similar view, projecting ₹88.00 in Q1 and ₹88.50 by Q4 2025, driven by weaker interventions and global volatility. Even a Reuters-compiled consensus leans bearish, expecting the pair to be around ₹87.40 by December 2025, implying subdued but steady rupee weakness.

Not all analysts agree. BofA Global Research forecasts a stronger rupee at ₹84 by December 2025, underpinned by better capital inflows, tax reforms, and a softer US dollar backdrop.

If this scenario plays out, it could ease local gold prices in INR terms despite global firmness.

In short, while the balance of opinion points to a weaker rupee—and by extension, a bullish tilt for MCX gold in INR—currency strength on policy or inflow surprises remains a key counterweight.

Gold Price Forecasts in India: How High or Low Can XAU/INR Rates Go?

Analysts globally see gold retesting its $3,500 record high by year-end.

UBS and Bank of America are similarly bullish, targeting $3,500 an ounce, supported by growing geopolitical tension and robust central bank buying.

Meanwhile, Ventura Securities projects a bold rally to $3,600 an ounce, citing mounting economic headwinds and safe-haven demand.

Translating to XAU/INR terms: assuming a USD/INR rate of ~₹88 by year-end, a $3,100 gold price translates to approximately ₹8.6 lakh per 10 grams.

At a $3,500 gold price, that rises to around ₹9.7 lakh per 10 grams. If gold hits $3,600, the XAU/INR benchmark nears ₹10 lakh per 10 grams—echoing local expectations, such as projections of gold rallying to ₹1.10 lakh per 10 grams within a year in India.

In a nutshell:

• Base-case scenario (Gold ~ $3,100): XAU/INR ~ ₹8.6 lakh/10g.
• Mid-range bull case (Gold ~ $3,500): XAU/INR ~ ₹9.7 lakh/10g.
• Strong bull scenario (Gold ~ $3,600+): XAU/INR ~ ₹10+ lakh/10g.

In short, XAU/INR may comfortably move into the ₹8.5–10 lakh per 10g range by year-end, depending on how global bullion prices and USD/INR trends evolve together.

MCX’s Gold to INR forecasts may follow a similar upside, given its strong positive correlation with the broader spot gold market trends.