Gold’s break above $3,500: A market autopsy

India is stacking big time

Gold didn’t tiptoe across the $3,500 threshold; it stormed through it like a heavyweight breaking free of the ropes. What unfolded was not a speculative spike but the slow burn of structural change finally catching fire. The most telling part of this rally begins in New Delhi’s vaults. India has stopped treating gold as a tradeable whim and started treating it as bedrock. Since 2022, the Reserve Bank has abandoned the old dance of chasing dips and trimming peaks. Now it is tonnage, not price, that dictates the flow. Whether bullion trades at $2,000 or $3,500, the bid is steady. That is inelastic demand at sovereign scale, a current in the river that no surface ripple can disturb. When India cut import duties last year from 15% to 6%, that current quickened. Imports surged almost 50% year on year, reserves swelled to nearly 880 tonnes, and Treasuries were trimmed by $15 billion. This isn’t diversification at the edges but a deliberate reshaping of the reserve foundation. And it isn’t just India—China, Brazil, and others are circling the same calculation, quietly chiseling away at the dollar’s pedestal.

Into this structural reweighting came Powell at Jackson Hole, stepping down from the hawk’s perch onto a dove’s branch. By shelving the FAIT framework and implicitly treating 3% as the new 2% inflation target, the Fed admitted the inflation fight is no longer its singular crusade. The priority has shifted to propping up a fragile labor market, and with that shift the dollar’s aura of discipline dimmed. Traders translated his words instantly: the bar for easing has fallen, and the put under risky assets has thickened. The tape responded with ferocity—gold leapt $66 in a single session, silver sprinted, and sidelined U.S. money lunged back in. The bigger message was not the pop itself but what it implied: Powell validated the central bank strategy already underway. If the Fed is willing to live with hotter inflation while cutting rates, then gold is no longer just a hedge; it is insurance against the Fed itself.

Traders didn’t need to be told twice. They piled in, CTAs flipped, macro funds re-risked, and the reflexive bid turned a policy pivot into a breakout. But the Fed is only half the story. The other half is geopolitical. By trimming Treasuries and building bullion, India is signaling that Washington’s paper no longer holds exclusive claim to reserve status. BRICS summits and SCO photo ops may be diplomatic theater, but they reflect a deeper truth: gold is becoming the neutral currency of a fracturing world. And unlike speculative hot money that vanishes at the first downtick, these sovereign flows are sticky. They are ballast, not froth.

The timing makes the move even more striking. September usually brings thin books, risk reduction, and liquidity stress that weigh on metals. Equities have sagged, bonds have buckled, yet gold has stood tall. The seasonal script has been torn up because structural buying has rewritten the plot. Meanwhile, the global bond market has been singing a warning song. U.S. 30s are pressing toward 5%, curves across Europe and Japan are steepening—not from healthy reflation, but from inflation risk outlasting policy discipline. Short rates sag on expectations of cuts, while the long end groans under deficits and sticky prices. Normally gold fades when long yields rise. This time, bullion is rising alongside them. That divergence is the tell: the market believes policy is easing too soon.

The rally, then, is not about a single cut or a thin September calendar. It is about structural demand colliding with policy drift. It is India anchoring reserves in bullion regardless of price. It is Powell lowering the bar for easing. It is bond markets flashing red. It is BRICS trimming dollar paper and buying metal as if hedging against tomorrow’s headlines before they are written. Gold is rising because trust in fiat promises is thinning while faith in a five-thousand-year-old lump of metal is thickening.

Breaking $3,500 was not an accident of liquidity; it was confirmation of a new order. Gold has moved from hedge to cornerstone, from sideshow to centerpiece. The combination of inelastic sovereign demand, dovish Fed recalibration, and bond market distress has shifted the equilibrium higher. If Powell cuts before inflation is truly contained, the steepening will worsen, debt fears will deepen, and the sovereign bid will only intensify. Seasonal weakness may flicker, but structural flows have changed the DNA of the market. At $3,500, bullion is no longer just trading—it is testifying. It is the market’s cross-examination of monetary credibility, and right now, the answers are not convincing.