Thursday, 11 Dec, 2025
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Robust demand, driven by cultural traditions and investment appeal, is expected to drive gold prices toward Rs 85,860 per 10 grams in India by year-end. A weaker rupee, persistent inflation risks, and seasonal buying during festivals and weddings are likely to provide additional upward momentum.
Gold prices have soared in early 2025 in India, surging over Rs 8,600 per 10 grams in just six weeks—an 11 per cent increase—as investors seek refuge in the precious metal amid global economic turbulence. This rally follows President Donald Trump’s recent decision to impose tariffs on steel and aluminium imports, a move that has reignited fears of trade tensions and stoked demand for safe-haven assets.
On February 11, the yellow metal touched a record high, with spot prices peaking at $2,942.70 per ounce before experiencing mild corrections. More precisely, in India, this translated to 24K gold exceeding Rs 86,500 per 10 grams, with 22K and 18K variants nearing Rs 80,000 and Rs 65,000, respectively. The surge has been fuelled not only by trade disruptions but also by broader concerns over slowing global growth, geopolitical uncertainty, and inflationary pressures.
Market analysts are of the view that that gold’s trajectory hinges on its ability to sustain levels above $2,500 per ounce. Should this threshold hold, the rally could extend towards $2,790 and potentially $3,000 per ounce in the coming months. India’s gold demand, fuelled by cultural traditions and investment appeal, is poised to push prices toward Rs 85,860 per 10 grams by year-end. A weaker rupee, persistent inflation risks, and seasonal buying during festivals and weddings will further drive domestic gold prices.
Central bank purchases, including by the Reserve Bank of India (RBI), reinforce long-term demand, while recession fears, geopolitical tensions, and potential US Fed rate cuts boost gold’s safe-haven appeal. Also, a major financial crisis, a sharp dollar decline, or aggressive monetary easing could trigger sharper gains. However, a gradual rise with intermittent corrections remains the base case.
Gold’s recent performance highlights its status as a hedge against uncertainty. With trade frictions escalating and central banks navigating complex economic conditions, investors appear increasingly inclined toward safe-haven assets. Whether this rally sustains or loses steam will depend on how global markets react to shifting trade policies and macroeconomic headwinds. For now, the precious metal remains firmly in the spotlight.
Separately, Finance Minister Nirmala Sitharaman, addressing the Lok Sabha on February 11, cited former RBI Governor Raghuram Rajan to contextualise the rupee’s recent depreciation. The Indian currency has faced mounting pressure amid a strong US dollar, capital outflows, and global economic uncertainties.
She emphasised that currency volatility across major economies had been significant, with the dollar index rising by 6.5 per cent from October last year to January this year. The FM further highlighted that currency fluctuations are influenced by external factors, including the Federal Reserve’s monetary policy stance and geopolitical developments. While a weaker rupee can boost exports, it also raises import costs, particularly for crude oil, which could feed into inflation.
The Indian currency remains one of the world’s more resilient currencies despite recent depreciation, the FM said. Between October 2024 and January 2025, the South Korean won, Indonesian rupiah, and Malaysian ringgit fell 8.1 per cent, 6.4 per cent, and 5.9 per cent against the dollar, respectively. Major G-10 currencies also saw sharp declines, with the yen losing 7 per cent, the pound 6.6 per cent, and the euro 5.8 per cent. In contrast, the rupee weakened by less than 3 per cent, emphasising its relative stability amid global currency fluctuations.
