Gold prices surged past the Rs 80,000 per 10-gram mark on Wednesday.
Marking a historic milestone, according to data from the India Bullion and Jewellers Association (IBJA). This significant increase reflects a rise in safe-haven demand as investors react to potential market volatility stemming from the anticipated impact of Donald Trump’s presidency. Additionally, the global weakening of the US dollar has contributed to the price surge.
Declining Dollar Index Drives Gold Demand
The dollar index, which tracks the US dollar’s performance against major currencies like the euro and yen, has been on a downward trajectory. After reaching a two-year high of 110.17 last week, driven by trade tariff expectations, the index has declined in five out of the last six sessions. This weakening has prompted global investors to shift from dollar-based investments to gold, resulting in significant price appreciation.
Record Prices Amid Economic Uncertainty
On Wednesday, IBJA reported that 24-carat gold closed at Rs 80,194 per 10 grams, up from Rs 79,453 on Tuesday. The previous record high was Rs 79,681 per 10 grams, set on October 30, 2024.
Gold’s status as a secure investment during economic and geopolitical turmoil has further fueled this surge. However, while urban and institutional investors are capitalizing on gold’s safe-haven appeal, retail jewellery sales during the wedding season could face challenges due to high prices.https://img-s-msn-com.akamaized.net/tenant/amp/entityid/AA1xHHFL.img?w=635&h=337&m=6
Expert Insights on Price Trends
Renisha Chainani, Head of Research at Mumbai-based Augmont Gold, highlighted the role of Trump-era policies, including increased tariffs and trade uncertainties, in driving gold prices. “Gold prices are likely to stabilize only if there’s a reversal in dollar trends or a pause in tariff hikes,” Chainani noted. “Improved global trade conditions could ease prices by mid-2025. Until then, elevated prices may affect demand in price-sensitive markets like India, though urban investors are likely to continue hedging against uncertainties.”
Challenges Ahead for Gold Markets
With gold prices at an all-time high, the industry faces a delicate balance between safe-haven demand and affordability concerns. In price-sensitive regions like India, the impact on consumer demand will likely be closely watched in the coming months.
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