Gold prices have surged by 11% in 2025, outpacing equities and Bitcoin, with industry reports forecasting that the precious metal could reach $3,000 per ounce soon. Some predictions suggest that gold could surpass $3,080 in the first quarter of the year.
In India, gold prices reached a new high on February 13, 2025, with the cost of 10 grams climbing by Rs 1,300 to an all-time high of Rs 89,400, according to the All India Sarafa Association. Previously, gold with 99.9% purity had closed at Rs 88,100 per 10 grams. Additionally, gold with 99.5% purity saw a notable rise, reaching Rs 89,000 per 10 grams from its previous closing price of Rs 87,700.
Silver Prices Also Surge
Silver also experienced a sharp increase, with prices rising by Rs 2,000 to hit a four-month high of Rs 1 lakh per kilogram on February 14, up from Rs 98,000 per kg the previous day.
Gold Futures Continue to Climb on MCX
On the Multi Commodity Exchange (MCX), gold futures for April delivery rose by Rs 184, trading at Rs 85,993 per 10 grams.
Factors Behind the Price Surge
Several factors are driving the rise in gold prices, including a weaker dollar index and ongoing support from U.S. tariff policies. Jateen Trivedi, VP of Research at LKP Securities, stated that gold prices continue to climb due to the ongoing trade policies in the U.S. and a decline in the dollar’s strength. Gold on the MCX and Comex reached $2,935 per ounce, with spot gold hitting a record high of $2,943 and Comex gold peaking at $2,968 an ounce.
US Tariffs and Global Trade Uncertainty Fuel Gold Demand
The uncertainty surrounding U.S. trade policies, especially the potential for increased tariffs against several nations under President Donald Trump, has further driven demand for gold as a safe-haven asset. Ventura Securities highlighted that these trade tensions and the accompanying tariff increases have led to a significant rise in demand for physical gold, particularly in London, Switzerland, and Asia, as traders rush to secure the metal ahead of potential new tariffs.
“The demand for gold is being fueled by both geopolitical uncertainties and inflation concerns,” Ventura Securities noted in a report. Central banks around the world have also increased their gold reserves as a safeguard against fiscal deficits and the potential for global recessions.
Central Banks Increase Gold Reserves
Central banks purchased 1,045 tonnes of gold in 2024, marking the third consecutive year of purchases exceeding 1,000 tonnes. This marks a significant shift, as central bank purchases over the past three years have exceeded the total gold bought in the six years prior to 2022.
“Gold’s recent strength can be attributed to a mix of higher safe-haven demand, geopolitical uncertainty, inflation concerns, and policies by central banks,” the Ventura report added.
Challenges for Gold Amid Stronger Dollar and Rising Yields
Despite the strength of gold, its rise is tempered by the ongoing strength in the U.S. dollar and rising U.S. Treasury yields. Gold has traditionally struggled in such an environment, as higher interest rates make non-yielding assets like gold less attractive. Federal Reserve Chair Jerome Powell has indicated no immediate plans to cut interest rates, further contributing to the pressure on gold.
Outlook: Volatility Expected but Bullish Sentiment Remains
The outlook for gold remains volatile, with gains likely to be capped by the strong U.S. dollar and elevated interest rates. Despite this, gold is expected to maintain its bullish trend as long as economic uncertainty persists, with analysts forecasting continued demand from both central banks and retail investors.
As long as geopolitical and economic instability remains, gold is likely to remain a favored asset, despite the pressures from rising bond yields and a strong dollar.
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