Gold prices worldwide have shattered records in recent weeks, crossing the $3,000 per ounce mark for the first time, driven by a cocktail of geopolitical unrest, economic uncertainty, and robust central bank buying.
In India, the world’s second-largest gold consumer, this unprecedented rally has pushed domestic prices to a staggering ₹90,750 per 10 grams for 99.9% purity gold as of March 27, igniting a mix of excitement and unease among buyers, jewelers, and policymakers.
The Gold Price Surge
The surge began accelerating in early 2025, fueled by escalating tensions in the Middle East, particularly the Israel-Gaza conflict, which has rattled global markets.
Investors, spooked by the prospect of a broader tariff war under the incoming US administration, have flocked to gold as a safe-haven asset.
Adding to the momentum, central banks—led by heavyweights like China, India, and Uzbekistan—have stockpiled over 1,000 metric tons of gold in the past year, a trend that shows no signs of slowing.
The Reserve Bank of India alone added 32 tons to its reserves in 2024, signaling a strategic shift amid a weakening rupee, down 1.1% this year against the dollar.
Indian buyers feel the heat
In India, the ripple effects are profound. Gold, a cultural cornerstone for weddings and festivals, has seen a 15% price jump since January, outpacing inflation and wage growth.
In Delhi’s bustling Karol Bagh market, jewelers report a stark divide: while high-net-worth buyers snap up gold bars as an investment, traditional jewelry demand is faltering. The All India Sarafa Association noted a 10% dip in jewelry sales this month, with recycling activity spiking as households cash in old ornaments.
The economic stakes are high. India imports nearly all its gold—over 800 tons annually—making it vulnerable to price shocks. The trade deficit widened by 4% in February as import costs soared, prompting fears of further rupee depreciation. Discounts on domestic gold have hit an eight-month high, with dealers offering up to $41 per ounce below official rates to offload stock, a sign of softening demand. Analysts predict imports could plummet 20% in the coming quarter if prices don’t cool, a blow to an industry employing millions.
Yet, not all see gloom. ‘This is gold’s moment,’ said Anil Agarwal, chairman of Vedanta Resources, in a recent statement. He urged India to ramp up domestic production, pointing to untapped deposits in Rajasthan and Karnataka that could offset reliance on imports. The government, meanwhile, is mulling tax incentives to boost recycling and exploration, though progress remains slow.
Global outlook
Globally, the rally shows no immediate ceiling. Bank of America raised its 2025 forecast to $3,200 per ounce, citing persistent trade policy chaos and a dovish U.S. Federal Reserve stance.
In India, the Multi Commodity Exchange (MCX) saw gold futures climb to ₹89,796 earlier this week, with traders betting on a push toward ₹1 lakh per 10 grams if the dollar-rupee pair breaches 89. For now, consumers brace for a bittersweet festive season—gold’s luster undimmed, but its price a growing burden.