Global uncertainties have driven gold prices to an all-time high, as the precious metal continues to rise since the last few weeks. An imbalance in the dollar-rupee ration, trade war tensions and concerns over economic growth due to U.S. President Donald Trump’s tariff plans have led to an increase in the pricing, propelling every day at an unexpected rate.
With the price of gold hitting approx. INR 98,000 per 10 grams in the local commodities market, it is just numbers away from the six-digit figure of INR 1 lakh.
The main question here is that with the ongoing trend of growing tariff tension and unstable investor sentiments, will the demand for this precious metal as a safe asset keep the rate soaring high? According to experts, going ahead, the price of gold is likely to soar further as the risky assets such as equities, bonds and currencies have seen wide-spread selloffs. Investors have started shifting their preferences to physical gold deliveries, instead of cash settlements amid concerns that the hike in trade tariffs by the U.S. could delay import and export shipments.
The price of gold has shown a significant upward movement recently. As of Monday, April 21, 2025, the price of 24 Carat gold in India is around ₹9640 per gram, marking an increase from the previous day.
Factors Influencing Gold Prices:
Several factors contribute to the fluctuations in gold prices:
- Global Economic Uncertainty: Gold is often considered a safe-haven asset. During times of economic instability, such as now, investors tend to invest in gold which leads to an increase in its demand and price.
- US Dollar Strength: Gold is typically priced in US dollars. A weaker dollar makes gold relatively less expensive for buyers using other currencies, potentially increasing the demand and prices.
- Interest Rates: Lower interest rates can make gold more attractive as an investment compared to interest-bearing assets, thus increasing demand and price.
- Geopolitical Tensions: Political instability, conflicts, and international tensions often lead to increased demand for safe-haven assets like gold.
- Central Bank Activity: Central banks (such as the RBI) hold significant gold reserves, and their buying or selling activities can influence market sentiment and prices.
Investors often monitor gold price trends and the factors influencing them to make informed investment decisions. Options for investing in gold in India include physical gold (coins, bars, jewellery), Gold ETFs, and Gold Mutual Funds.
Arguments for Gold as a Good Investment Today:
- Safe Asset: Gold is considered a valuable asset for portfolio diversification and as a protector against economic uncertainties and inflation. The current global scenario with recession fears and international tensions supports this argument.
- Portfolio Diversity: Gold has a low correlation with other asset classes like stocks and bonds and hence including gold in can help reduce overall risk and volatility.
- Potential for Higher Gains: Some analysts predict that gold prices may continue to rise in 2025, with forecasts ranging from 1 lakh plus, making it a viable option for the future.
Arguments Against Gold as a Good Investment Today:
- High Entry Price: Given the record-high prices, the entry point for investing in gold is quite high. Buying at a peak could lead to lower returns if prices fall down eventually.
- Uneven Yield: Unlike stocks that pay dividends or bonds that pay interest, gold does not generate any income.
- Price Fluctuation: While it is an asset investment, gold prices can be volatile and are influenced by various unpredictable factors.
The global price for gold by Goldman Sachs by the end of 2025 has been estimated at $3,700 per ounce (1 ounce is around 28 gms), so as per the latest currency forecast (1 gm of gold will cost $132, which is approx., INR 11,270). If global prices reach this prediction level, then the rate in India could also see significant increases, potentially reaching ₹1.25 lakh per 10 grams according to some forecasts.
Given the current economic and political scenario, gold retains its appeal as a safe-haven asset and a buffer against potential risks. However, the already high prices suggest that significant returns might be harder to achieve in the short term, as compared to when the price actually goes lesser in future. One must invest in gold as an option, knowing that the unpredictability will continue and must not get affected if the market rises and the rate goes up.