Key Points
Gold hits multiple record highs in 2025
Middle East conflicts boost precious metal demand
US economic uncertainty drives investment
Central banks continue gold reserve accumulation
This surge comes despite stable prices on Monday, as investors responded to a weaker US dollar and uncertainties surrounding US President Donald Trump's tariff policies.
Gold is widely considered a safe-haven asset, gaining traction during times of geopolitical and economic instability.
The metal has already hit 16 record highs in 2025, surpassing the $3,000 per ounce mark on four occasions.
Last week, gold prices soared to new all-time highs in both global and Indian markets. In India, 24K gold touched Rs 90,450 per 10 grams, while 22K gold climbed to Rs 82,910 per 10 grams.
Globally, spot gold reached $3,049.89 per ounce, after briefly hitting a record $3,055.96 per ounce earlier in the session. Meanwhile, US gold futures surged 0.6 per cent to $3,058.40 per ounce.
There are several factors fueling gold's sharp rise. Renewed conflicts in the Middle East, particularly Israel's military operations in Gaza, have driven investors toward gold.
The possibility of US tariffs under the Trump administration is also creating global economic uncertainty.
Persistently high inflation and fears of slower economic growth are prompting investors to hedge with gold.
Additionally, expectations of a US Federal Reserve interest rate cut have further boosted gold's appeal.
The Fed kept interest rates unchanged at 4.25 per cent-4.50 per cent last week but signalled the possibility of two rate cuts by the end of 2025.
Lower interest rates reduce the opportunity cost of holding gold, making it a more attractive investment.
Reports suggest that central banks and Gold Exchange Traded Funds (ETFs) will continue to be key drivers of gold demand in 2025.
The Reserve Bank of India (RBI) has been steadily increasing its gold reserves, adding 72.6 tonnes in 2024. Gold now constitutes 10.6 per cent of the RBI's total forex reserves.
Despite high prices impacting jewellery demand, investment in gold remains strong. Indian gold ETFs saw a net inflow of Rs 112 billion in 2024.
