By Sachin Jain
Tariff uncertainties, a weaker dollar, volatile equities and growing fears of stagflation have led institutional investors and central banks to seek the safety of gold, pushing gold prices to all-time highs. In the short term, all factors point towards the yellow metal maintaining its upward trajectory, explains Sachin Jain
Gold price outlook
In the short term, all factors point towards gold price maintaining its upward trajectory due to ongoing global trade tensions. Gold has kept is momentum, it hit another record high, rising 1.9% last week to $3,071/oz last Friday – marking its fourth straight weekly gain. On Wednesday, it touched $3124/oz. It has outperformed most assets in 2025. A weaker dollar, volatile equities, growing fears of stagflation pressure and tariff uncertainties all have contributed to gold’s strength.
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Domestic demand remains resilient due to deep cultural ties and its function as a financial hedge. While high prices have led to a slowdown in new jewellery purchases, seasonal factors and ongoing festivities, along with wedding-related purchases, are expected to bolster short-term demand despite some price-driven constraints in traditional jewellery consumption. Our full-year forecast for demand in India is between 700-800 tonne.
Impact of duty cut on imports
Reduction of import duties has had a positive impact on the industry. It has helped reduce unofficial imports, stabilise official channels, and has supported the domestic gold industry. It has led to a more organised and transparent industry, resulting in a stronger gold market. Gold smuggling has also reduced since July 2024.
Returns vs that of other asset classes
Gold has proven to be an exceptionally reliable safe-haven asset over the past few years, consistently preserving wealth amid economic and geopolitical uncertainty. It has delivered robust returns, with record-breaking price highs. While silver also serves as a store of value, its price tends to be more volatile due to its significant industrial applications and higher sensitivity to economic cycles. Equities and real estate have delivered returns during favourable periods, but are generally more exposed to market cycles and policy shifts. Overall, gold’s steady performance during uncertain times makes it stand out from other asset classes, which tend to be more unpredictable.
Why are central banks buying gold?
Central Banks are increasing their gold holdings as part of a broader strategy to diversify their foreign exchange reserves,
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