In a dramatic surge that has caught the attention of investors and economists alike, gold and silver prices in India have skyrocketed to historic highs, driven by mounting global uncertainty and a flight to safe-haven assets. As of Friday, 24-carat gold closed at ₹1,09,707 per 10 grams, while silver surged to ₹1,28,008 per kilogram—both setting new records in the domestic market.
This rally marks a significant milestone in the precious metals market, underscoring the deepening concerns over geopolitical tensions, economic slowdown fears, and expectations of monetary easing by major central banks. The Indian Bullion and Jewellers Association (IBJA) confirmed that gold prices rose ₹1,670 over the week, while silver gained ₹3,595.
What’s Driving the Surge?
Several converging factors have contributed to this unprecedented rise:
Geopolitical Tensions: Escalating conflicts in Eastern Europe and the Middle East have rattled global markets. Investors are increasingly turning to gold and silver as hedges against geopolitical instability.
Tariff Worries and Trade Frictions: Renewed tariff threats between major economies, particularly the U.S. and China, have reignited fears of a global trade slowdown. This has pushed investors toward non-currency assets like precious metals.
Federal Reserve Rate Cut Expectations: Weak U.S. jobs data and signs of economic deceleration have fueled speculation that the Federal Reserve may cut interest rates in its upcoming meeting. Lower interest rates typically weaken the dollar and boost demand for gold, which does not yield interest but retains intrinsic value.
Dollar Weakness: The U.S. dollar has shown signs of softening, further enhancing the appeal of gold and silver. As the dollar declines, commodities priced in dollars become cheaper for holders of other currencies, increasing demand.
Central Bank Buying: Global central banks, particularly in Asia, have ramped up their gold purchases, adding to the upward pressure on prices. China’s central bank alone has reportedly added several tonnes to its reserves in recent months.
Impact on Indian Market
In India, the surge has had a ripple effect across sectors:
Jewellery Industry: Retailers are witnessing a slowdown in consumer purchases due to high prices, but investment-grade bullion sales are on the rise. Many buyers are opting for smaller denominations or digital gold to hedge against inflation.
Investment Portfolios: Financial advisors are recommending increased allocation to gold and silver in diversified portfolios. With equity markets showing volatility, precious metals are being viewed as a stabilizing force.
Futures Market: On the Multi Commodity Exchange (MCX), October gold contracts settled at ₹1,09,356 per 10 grams, up 0.34% on Friday. Silver futures also remained firm, reflecting strong investor sentiment2.
Global Outlook
Globally, Comex gold traded at $3,680.7 per ounce, extending gains as traders sought refuge from economic and political risks. Analysts believe the rally may continue if current conditions persist. Jateen Trivedi of LKP Securities noted that gold remains strong within a range of ₹1,07,000–₹1,12,000 per 10 grams, despite being in “overbought territory”1.
Silver, often seen as gold’s more volatile cousin, has mirrored the upward trend. Its industrial applications and dual role as a monetary asset have made it particularly attractive during periods of economic uncertainty.
What’s Next?
While the current rally has brought cheer to investors, it also raises questions about sustainability. If the Federal Reserve does cut rates, and geopolitical tensions escalate further, gold could breach the ₹1.12 lakh mark in the near term. However, any signs of economic recovery or diplomatic breakthroughs could temper the rally.
For now, precious metals are shining brighter than ever, offering both a refuge and a reward for those who bet on their enduring value.
Sources: MSN India, Free Press Journal, Economic Times
