Varanasi (Shivam Kumar): The new era of 21st century pursuing gold not as the metal but the symbol of pride and prosperity globally and prefer as safe-heaven-asset. At the beginning of this year 2025 modern circumstances with so many international disputes led gold rate to rise high day by day. Here we will explore the reasons that drive changes in gold prices and examine the effects on global economies and individual investors. As far as seen 24K gold average prices in 2016 was 28500/- per 10 grams of gold soon it becomes 71500/- per 10 grams in 2024 and gradually it uprises to 96300/- per 10 grams in April, 2025.
However, the main concern for driving gold prices due to several challenges occurred like global fears of recession, persistent trade tensions and other international conflicts. As per the TATA AMC report, the weakening of the US DOLLAR INDEX has weakened through early 2025 that directly benefits gold. This could be possibly by Donald Trump administration’s policy that favoring weaker dollar and increased tariffs. Now everyone is asking: will gold reach 1 lakh? Answer would depend upon few factors like aggressive central bank gold buying, rising investors inflows into gold ETFs and escalating geopolitical tensions.
Goldman Sachs has raised its gold price forecast to $3700 per ounce by the end of 2025. In India more than 80% of gold is imported thus gold rate is influence by the movements in US dollars. Economic relationship of gold and dollar is inversely proportional. It means when dollar weakens then gold becomes more expensive in rupees term, raising domestic gold prices and vice vera.
India is one of the largest consumers of gold as its demand for jewelry during weddings and festivals. The prior effects of gold price rise the cost of importing gold increases that lead to widening trade deficit since India import most of the gold. Another factor is INDIA’s RBI among the top 3 buyers adding 72.6 tons of gold to its reserve in 2024. Only Poland and turkey is ahead of India in net gold purchase of the year.
Now why are RBI or any central banks across the globe buying gold? It is because large scale gold buying tightens supply and to helps the economy diversify away from the US dollar, hedge against inflation, and strengthen reserve stability in global economic uncertainty.
According to report ICRA Analytics, investment in ETFs increased by 98.54% year on year, reaching 1979.21 crore in Feb, 2025. The reason behind increasing investment in ETFs is because it provides liquidity, transparency and ease of trading compared to physical gold.
As it is therefore no single reason for recent gold price hike but rather a combination of factors leads to gold price hike. Such fluctuations in gold prices perhaps may not let the global economics conditions and market sentiment to ensure financial stability.
