Gold prices are expected to extend their record-breaking surge into 2025, with analysts forecasting prices could soar to Rs. 85,000 to Rs. 90,000 per 10 grams in the domestic market. This optimistic outlook is driven by geopolitical tensions, ongoing economic uncertainties, and a dovish tilt in global monetary policy. However, any resolution of geopolitical crises or stabilization of the rupee could potentially weaken the yellow metal’s momentum.
Currently, gold prices are hovering around Rs. 79,350 per 10 grams in spot markets and Rs. 76,600 per 10 grams in futures trade on the Multi Commodity Exchange (MCX), having hit an all-time high of Rs. 82,400 per 10 grams on October 30. Silver, closely mirroring gold’s stellar performance, has also seen a 30% increase, surpassing the Rs. one lakh per kg mark.
Experts predict that precious metals, particularly gold, will continue to perform strongly in 2025, bolstered by factors such as geopolitical tensions, central bank purchases, and lower interest rates from major central banks. According to VP Jateen Trivedi, Research Analyst (Commodity and Currency) at LKP Securities, while the outlook for gold remains positive, the rate of growth may slow down in comparison to 2024. A global shift towards lower interest rates could inject liquidity into markets, weakening the US dollar and supporting higher gold prices. However, the cautious stance of the US Federal Reserve on rate cuts may temper price increases in the short term.
Central banks’ sustained gold purchases, driven by diversification strategies and concerns about currency instability, continue to provide robust support for bullion. Trivedi pointed out that geopolitical crises often lead to a 2-3% spike in precious metal prices, with investors turning to gold as a safe haven against uncertainty.
Despite gold’s strong performance, Gnanasekar Thiagarajan, co-founder and CEO of Omntrendz Research, noted that the momentum could face challenges as the geopolitical and economic uncertainty premium fades. He highlighted that market participants are now factoring in the potential economic impact of Donald Trump’s tariffs and policies on the US Federal Reserve’s mandate to reduce inflation. Thiagarajan also speculated that the Fed may opt for rate cuts from May onward, as this could clarify the new administration’s economic policies.
In the domestic market, the Indian government’s decision to reduce gold import duty by six percent in July resulted in a sharp Rs. 5,000 per 10-gram correction in gold prices, making the metal more affordable and fueling demand. Rahul Kalantri, Vice President of Commodities at Mehta Equities Ltd, observed that gold jewellery consumption grew by 17% in 2024, driven by price volatility and festive season demand.
The global demand for precious metals has also surged, with central banks, including India’s, continuing to purchase gold in large quantities as part of their strategy to diversify reserves amid economic uncertainties. Manav Modi, a commodity research analyst at Motilal Oswal Financial Services, emphasized that central bank buying is a key factor in gold’s upward price pressure, with their accumulation acting as a hedge against fiat currency volatility.
India’s gold imports hit a record high of $14.86 billion in November, a four-fold increase, driven largely by festival and wedding demand. However, former US President Donald Trump’s re-election bid added an unexpected twist to the bullion market. His stance on cryptocurrencies, combined with rising treasury yields, diverted some investors’ attention away from gold, contributing to ETF outflows and pressure on bullion prices in the latter part of the year.
Despite these challenges, Prathamesh Mallya of Angel One’s DVP-Research expects gold to maintain its positive momentum in 2025, predicting double-digit returns. Gold prices in the international market could rise towards the $3,200 per ounce mark, while MCX gold prices may rally to Rs. 87,000 per 10 grams.
In terms of demand, India’s gold purchases reached 77 tonnes from January to October, according to World Gold Council (WGC) data. Anindya Banerjee, Head of Currency and Commodity Research at Kotak Securities, noted that 2024 has been a landmark year for gold, with Comex gold surging over 40% to hit an all-time high of $2,801.8 per ounce in October. Retail demand and central bank purchases, especially from China, were key drivers of this surge.
Looking ahead to 2025, the Indian gems and jewellery industry is set for substantial growth. Saiyam Mehra, chairman of the All India Gem and Jewellery Domestic Council (GJC), forecasted the market would reach $100 billion by 2025, with a compound annual growth rate (CAGR) of 5-6%. Demand from the middle class, youth, and the wedding jewellery market will continue to drive growth in the sector.
Exporters also remain optimistic about 2025, with expectations of increased demand in key export markets, particularly in China. Vipul Shah, Chairman of the Gems and Jewellery Export Promotion Council (GJEPC), noted that demand in 2025 would benefit from the easing of geopolitical tensions and the growing demand from China, bolstered by government liquidity measures.
As 2025 unfolds, the global precious metals market will likely remain influenced by ongoing geopolitical developments, central bank policies, and shifts in investor sentiment, with gold continuing to shine as a safe haven amid uncertain economic conditions.
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