Gold prices in India reached a new all-time high on Wednesday, March 19, crossing Rs 90,000 per 10 grams. This increase is attributed to rising geopolitical tensions in the Middle East, uncertainties in global trade, and anticipation regarding the US Federal Reserve's monetary policy decision.
The geopolitical situation in the Middle East has been a significant factor influencing the gold market. As tensions escalate, investors tend to move towards gold, considered a safe-haven asset. This trend has contributed to the surge in gold prices.
Anuj Gupta, Head of Commodities & Currencies at HDFC Securities, highlighted that the growing demand is the main factor behind the rising prices observed over the past five years. Central banks, including those of China and India, have been bolstering their gold reserves amid global economic uncertainties, further fuelling this trend.
The perception of gold has shifted significantly, evolving from a traditional jewellery commodity to a preferred investment vehicle. Gupta, in an interview with ET Now, noted: "Now investors are taking gold as an investment, not as jewellery, so we saw a huge demand in gold bars, in gold coins, the demand is increasing."
Consequently, global gold prices have reached record highs, with MCX prices around Rs 88,350 per 10 grams and international spot prices near $3,012 per ounce. This investment-driven demand is pivotal in driving the ongoing price rally.
Gupta discussed changes in gold's price range, stating that "Three months back, it was in the $2,600-$2,700 range, now it is in the $2,900-$3,000 range. Whenever we saw a correction, it was only 20-30%."
Gold prices have been on a consistent rise, prompting investors to speculate about the possibility of prices reaching Rs 1 lakh per 10 grams. This upward trend in gold prices has caught the attention of market participants, who are keenly observing the market dynamics.
Gupta noted: "Yes, see, I can’t say right now, but yes, definitely, as the long-term horizon, it may test Rs 1 lakh."
In the short term, experts predict that gold prices could touch Rs 90,700 to Rs 91,000 per 10 grams on the Multi Commodity Exchange (MCX) by the end of the current financial year. Internationally, gold is expected to reach $3,200 per ounce during the same period. Investors are advised to stay informed about market trends and fluctuations as they consider their investment strategies.
"The trend is still bullish. Since January 2025, gold and silver have been the only asset classes performing better than others," he noted.
Gold to stay bullish
He suggests that gold remains bullish, offering potential buying opportunities if prices correct to $2,800 per ounce. Investors are advised to adopt a systematic investment approach, initially investing 10% and purchasing more with each market correction, indicating that "gold is a process of investment."
This bullish outlook is further supported by ongoing global uncertainties. Gupta emphasised that "gold is not used for selling purposes; people are always buying gold for holding," keeping the supply limited even with price surges. Geopolitical tensions, such as the Hamas conflict, and trade uncertainties from the Trump tariff plans, contribute to gold's appeal as a safe-haven asset.
"We saw geopolitical tension between the Hamas war, so that is again creating a safe-haven demand. Also, the Trump tariff plan is creating uncertainty in Europe, China, even the US, Mexico, and Canada," Gupta explained.