Economy
Mint Primer: Will gold soon touch ₹1 lakh/10gm?
Summary
- After a record-shattering 2024, prices of the yellow metal have maintained their momentum this year, consistently scaling new peaks.
While many of us have been obsessing over portfolio strategies, a simple nostrum from our grandmothers—“buy gold!"—is beating almost every asset class, not just in India but globally. Mint explains what the booming bullion market means for Indian investors.
How has the yellow metal been doing?
Gold prices seem to be following the Olympic motto—faster, higher, stronger. After a record-shattering 2024, prices of the yellow metal have maintained their momentum this year, consistently scaling new peaks. Gold in the international markets surged to an all-time high of $3,333 per ounce last week. In the Indian market too, Multi Commodity Exchange (MCX) gold contracts vaulted to ₹94,629 per 10gm on 17 April. The trend in the spot markets was even more robust, with the metal touching a lifetime peak of ₹98,000. Domestic gold prices have vaulted about 25% this year to date, compared with a 0.5% rise in the Nifty index.
Also read: Your Guide to Gold Loan Interest Rates and How to Maximise Savings
What are the factors fuelling this trend?
The main reason is the ratcheting up of geopolitical tensions, which have strengthened the safe-haven demand for gold across the world. The freezing of Russian central bank assets in 2022 following the Russia-Ukraine war triggered a wave of gold buying by central banks as countries rushed to shore up their strategic buffers. The current upheaval around US President Donald Trump’s ‘on-again, off-again’ tariffs has further burnished gold’s age-old reputation as a protective asset during uncertain times. The weakening of the US dollar index has also propelled rates, as gold is priced in USD globally.
Also read: US stocks, dollar sink as Trumps criticism of Fed chair worries investors
What has been the trend in the Indian market?
India is the world’s second-largest consumer of gold. After two months of decline, gold imports reached $4.4 billion in March—nearly double the previous month. Despite rising prices, imports rose to 812 tonnes in 2024 from 744 tonnes in 2023. However, in a sign of profit-booking, gold ETFs saw net outflows of ₹77 crore in March, following 10 months of inflows.
What is the outlook for this year?
Continuing macroeconomic uncertainty and strong demand from central banks are expected to drive prices even higher this year. A key contributor is likely to be China, the largest buyer, which holds around 8% of its reserves in gold, compared to 70% for the US, Germany, France and Italy. The global average is 20%. Goldman Sachs sees gold touching $3,700 per ounce by the end of 2025. In India, demand from weddings and festivals is firm, and many analysts see gold climbing to ₹1 lakh per 10gm by 2025-end or early ’26.
What should Indian investors do?
Gold remains a top choice for asset diversification to reduce risks, and traditionally moves inversely to stock markets. With Indian markets weighed by FII selling and lacklustre corporate earnings, the case for having gold in one’s portfolio becomes stronger. As per an analysis by HDFC AMC, since FY2000, gold has fallen less than or outperformed equities in every financial year where equities had a negative return. Leading players like Kalyan Jewellers, Senco and Titan have also reported strong topline growth of 23-39% in Q4.
