Gold prices soared to Rs 84,900 per 10 grams, driven by global factors and robust domestic demand. Learn more about this historic surge.
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How Domestic Factors Contribute to the Rally
The recent surge in gold prices isn’t solely a reflection of international trends. Domestic factors also play a significant role in driving up the metal’s value. According to analysts, local demand for gold has been robust, particularly as India prepares for the upcoming Union Budget announcement. Investors are anticipating potential changes in duties and taxes on gold, further fueling interest in the precious metal.
Additionally, the Indian wedding season often boosts demand for gold, and this trend seems to be continuing as more people turn to the metal as a hedge against inflation and economic instability.
Gold Futures and Silver Prices Continue to Surge
Gold futures also followed suit, setting new records on the Multi Commodity Exchange (MCX). The February delivery contract saw an increase of Rs 487, reaching Rs 82,210 per 10 grams, while April contracts hit Rs 82,415 per 10 grams. This increase in futures contracts signals sustained investor confidence in gold’s continued upward movement.
Meanwhile, silver futures for March delivery rose by Rs 403, reaching Rs 93,849 per kg. Silver, often seen as a more volatile counterpart to gold, saw a high of Rs 94,075 per kg during the day. These price movements highlight the strength of both metals, as investors look for assets that can weather economic uncertainty.
Global Gold Prices Surge to Record Levels
Gold futures on the international market also experienced significant gains. In the Comex market, gold for April delivery surged to a record high of USD 2,859.45 per ounce, marking a new peak for the precious metal. Analysts suggest that geopolitical tensions, particularly related to trade tariffs imposed by the United States on countries like Mexico, Canada, and China, have driven up demand for gold as a safe-haven asset.
Kotak Securities noted that gold futures surged in response to these geopolitical risks, along with expected rate cuts by major central banks such as the European Central Bank. “The combination of trade threats and central bank monetary policies has created a perfect storm for gold’s upward momentum,” the report stated.
What’s Next for Gold and Silver Prices?
As the world looks ahead, key economic indicators, including the upcoming US Personal Consumption Expenditures (PCE) inflation data, could influence further price movements in both gold and silver. “The PCE inflation data is crucial as it is a preferred measure of inflation for the US Federal Reserve. This data could lead to further fluctuations in the markets,” said Praveen Singh, Associate VP at Mirae Asset Sharekhan.
With the Union Budget for 2025-26 set to be announced soon, investors will closely watch for any policy changes that might impact the gold market. Experts suggest that any shifts in import duties or tax rates could influence gold’s price trajectory in the coming weeks.
Key Takeaways: Why Gold Prices Are Surging
- Strong Global Demand: Gold prices are climbing due to increasing demand as a safe-haven asset amidst economic uncertainty.
- Record Highs: Gold has hit an all-time high of Rs 84,900 per 10 grams in India and over USD 2,859 per ounce globally.
- Domestic Factors: Robust demand in India, combined with investor anticipation of potential changes in import duties and taxes, is contributing to higher prices.
- Geopolitical Tensions: Renewed trade threats from the US and the potential impact of central bank policies are driving up demand for gold.
With global economic instability continuing, gold’s role as a hedge against risk is expected to persist, potentially pushing prices even higher in the near future.
