Gold prices have surged to historic highs in 2025, pushed by a potent mixture of secure-haven demand, aggressive central financial institution shopping for, and a weakening US greenback. The dear steel has crossed $3,200 per ounce in world markets and Rs 93,000 per 10 gram in India.
The extraordinary rally in gold this yr comes amid rising geopolitical tensions, commerce-associated uncertainties, and mounting stress on conventional funding belongings like equities and bonds. Whereas fairness markets have skilled sustained promoting stress for the reason that begin of the yr, gold has maintained its upward momentum, reinforcing its status as a dependable retailer of worth.
The triggers
One of many key drivers behind this rally is the sharp fall in the US greenback. The Greenback Index has declined by 8% up to now in 2025, making gold cheaper and extra engaging to traders worldwide. Since gold is globally priced in {dollars}, any weak point in the foreign money tends to assist increased prices for the steel.
One other crucial factor is the sturdy shopping for curiosity from central banks the world over. In just the primary two months of 2025, internet gold purchases stood at 42 tonnes. This continues the development of reserve diversification, with central banks decreasing their publicity to US Treasuries and rising gold allocations. In every of the previous three years, internet central financial institution shopping for exceeded 1,000 tonnes yearly, underscoring sustained institutional demand.
Investor sentiment has additionally remained buoyant. Gold alternate-traded funds (ETFs) noticed inflows of 227 tonnes in the primary quarter of 2025, the best quarterly influx in three years. This means rising curiosity amongst each retail and institutional traders in hedging towards inflation, foreign money volatility, and fairness market danger.
Rising bond yields, which usually dampen gold prices, have not managed to curb the steel’s ascent this yr. Regardless of an uptick in US Treasury yields, gold has continued to submit positive aspects, suggesting that conventional correlations could also be breaking down amid broader macroeconomic considerations. The rise in yields is being attributed to the inflationary impression of contemporary tariffs, bond market dislocations, and waning international curiosity in US authorities debt.
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