Gold prices cross ₹83,000 per 10g: What's driving the rally?
04 Feb 2025

Gold prices in India have shot up over ₹83,350 per 10gm today, according to the India Bullion Association.

The increase is in line with global trends where spot gold is approaching an all-time high of $2,830.49 per ounce.

Global inflation concerns, market uncertainty due to geopolitical tensions and volatile equity markets, central bank buying and dollar index movement are driving the rise of the yellow metal.

Global inflation concerns and safe-haven demand fuel gold's rise
Market drivers

The US government's tariff policies on China, Mexico, and Canada are seen as inflationary, prompting investors to turn to gold as a hedge.

Further, market uncertainty fueled by geopolitical tensions and volatile equity markets is pushing investors toward gold.

Global central banks are also accumulating gold, further strengthening its upward momentum in the market.

Dollar index movement and supply-demand dynamics impact gold prices
Additional factors

The US dollar index recently crossed the 109 mark, affecting commodity markets including gold.

Major bullion banks are moving their gold reserves from Asian hubs such as Dubai and Hong Kong to the US to take advantage of higher futures premiums.

These supply-demand dynamics are also contributing significantly to the current surge of gold prices.

Market experts anticipate further price fluctuations for gold
Future predictions

Market experts predict upcoming US economic data could drive further price fluctuations.

The ADP employment report on Wednesday and non-farm payrolls on Friday could impact the Federal Reserve's monetary stance.

Rahul Kalantri, VP Commodities at Mehta Equities Ltd, said "Gold could maintain its bullish momentum due to global uncertainty and central bank buying."

He also noted specific support and resistance levels for gold prices in India.

Rising dollar index may lead to short-term corrections
Expert insights

Colin Shah, MD of Kama Jewelry, suggested a rising dollar index may cause short-term corrections.

He stressed "Gold prices will remain in focus through 2025, influenced by Trump's tariff stance and global trade policies."

Experts advise a cautious approach for investors looking to invest in gold right now. They recommend staggered buying instead of lump-sum investments and looking at gold ETFs, sovereign gold bonds for long-term hedging.