Gold prices jump in 2025 is indeed historic, with rates climbing approximately 25% year-to-date. In the domestic market, gold touched a new record of ₹98,100 per 10 grams in Delhi’s bullion market, while on MCX, it reached ₹95,239. Globally, gold prices have surged past $3,350 per ounce.
Over the past five years, gold has outperformed all other asset classes, delivering an impressive 110% return. Experts attribute this robust rally to a combination of 10 major global and domestic factors.
10 Key Factors Behind the Gold Surge
- Global Tensions: Ongoing conflicts involving major powers like the US, China, and Russia, as well as unrest in the Middle East, have heightened demand for gold as a safe-haven asset.
- Economic Slowdown Fears: Leading economies like the US, China, Germany, and Japan are showing signs of slowdown, prompting investors to seek refuge in gold.
- Rising Inflation: Inflationary pressures, partly due to new tariff policies and supply chain disruptions, are steering investors towards gold, a traditional hedge against inflation.
- Central Banks Stockpiling Gold: Countries like China, India, Turkey, and Poland have increased their gold reserves to reduce dependence on the US dollar.
- Weakening Dollar: The US dollar’s depreciation is making gold cheaper for foreign investors, boosting its global demand.
- Retail Investment Surge: Market volatility and lower returns from bonds are pushing retail investors towards gold ETFs and physical gold.
- Expectation of Lower Interest Rates: In India, the RBI has cut the repo rate twice, while the US Federal Reserve is also expected to reduce rates. Lower interest rates enhance gold’s appeal as an investment.
- De-Dollarization Trends: Several nations are reducing their reliance on the dollar and turning to gold as an alternative reserve asset.
- Banking Sector Stress: Falling interest rates on fixed deposits and savings accounts have led Indian savers to invest more in gold.
- Supply Constraints: Global gold mining output is declining, creating a supply-demand imbalance that supports higher prices.
How High Can Gold Go?
According to market analysts, MCX gold could climb to ₹99,000, and in case of further geopolitical escalations, the price might even approach ₹1.25 lakh per 10 grams.
According to Goldman Sachs, if current trends continue, the price of international gold could rise to $4,500 an ounce. Experts say that shifting geopolitical and economic conditions will significantly impact future directions.
