Why are Gold Prices Rising in India in 2025?

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Gold holds significant value in India, deriving wealth, cultural heritage, and financial security. Gold continues to play a crucial role in today’s global economy, contributing to the improvement of the world’s economic health. The demand for gold is limited by its supply, which is why gold prices are rising, thereby enhancing its relevance in modern Indian economies.

What are the reasons behind the rising price of gold?

Understanding the reasons behind the rise in gold prices is crucial for making informed financial decisions, especially if investors plan to invest in gold or take out a gold loan. There are various global and domestic factors influencing the current gold price, and gold demand and value in unique ways.

• Economic Uncertainty: Whenever the global economic market is slow or a financial crisis occurs, most investors are willing to turn towards a safe-haven asset. This shift in consumer preference is expected to lead to a rise in the gold price. For instance, during recessions, people prefer holding gold over volatile assets.
• Geopolitical Tensions: Political instability, conflict, and wars around the world create fear in financial markets, leading to a rise in the price of gold and impacting the purchasing power of individuals during periods of geopolitical tension.
• Hedge Against Inflation: The value of currency decreases as inflation increases, so investors raise their funds to move into preservation of gold, which impacts the purchasing power of an individual, leading to a rise in the gold price.
• Weakening of currency: The reduction and weakening of the rupee impacts the cost of importing gold into India. This leads to a rise in the gold prices of the economy.
• Central Bank Policies: When central banks reduce interest rates or introduce any liquidity measures, it leads to a reduction in the opportunity costs. A lower gold loan interest rate may increase the attractiveness of gold as an asset, leading to a rise in gold prices within the economy.

Historical Gold Rate Trend in India 

Here is the gold rate year-wise chart, summarising key price points:

India’s relationship with gold is both emotional and economic. The country’s gold price history highlights changing financial outcomes, inflation trends, and global uncertainties. Evaluating the gold price history in India helps investors understand long-term trends and make informed decisions. 

• The history of the gold price rise in India reflects a steady increase over time, with a notable surge during economic crises in India.
• In the 1990s, the rate was around ₹3,200 per 10 grams, gradually increasing to ₹4,400 by the early 2000s.
• The 2008 global financial crisis drove gold prices to nearly ₹20,000 per 10 grams.
• In 2020, due to pandemic-related uncertainties, gold crossed ₹50,000 per 10 grams.
• Throughout history, the value of gold has been considered a safe and reliable long-term investment.
• Today, gold remains a preferred investment choice for Indian households, offering long-term returns.

How to Use Historical Data to Predict Future Trends    

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• Analyse how gold rates have risen during past economic crises to forecast future performance.
• Review inflation periods to know the reasons why gold prices are rising.
• Examine the geopolitical events that influence gold price fluctuations in India.
• Utilise patterns from previous years to forecast peak demand periods and assess the reasons behind the increase in the gold rate.
• Combine historical data with current global trends to make investment decisions.

Gold Prices in the Last 10 Days

Here is the list of gold prices for the last 10 days to make better buying, selling, or loan decisions, and evaluate the gold rate rises:

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Future Anticipations of Gold Price Trends in India 

Future predictions of gold prices are expected to maintain their bullish streak in the coming days, with any dips offering an opportunity to buy, according to Manav Modi, Senior Analyst at Commodity Research at Motilal Oswal Financial Services Ltd.

Gold prices are rising and extending their position, primarily breaching the $3,900 mark for the first time, supported by robust safe-haven demand and geopolitical factors. The gold price forecast for next week should only be used as a guide and not as a basis for making investment decisions. Gold prices often fluctuate weekly due to global market trends, currency values, and economic conditions. 

How Gold Price Predictions Impact Gold Loan Values

The gold rate prediction for a rise in gold rates can significantly impact the value of gold loans. Now, here is a look at the impact of gold loans:

• Loan-to-value (LTV) ratio: The LTV ratio determines the amount of loan that investors can obtain against the value of their gold. As gold prices rise, lenders may be more willing to offer higher LTV ratios.
• Higher loan amounts: Rising gold prices increase the value of collateral, enabling larger gold loan amounts.
• Interest rates: If the gold loan interest rates rise, it impacts the price of gold, as the gold price may also increase with the increment in interest rates.
• Margin Call: If the value of pledged gold reduces, investors may need to top up the loan amount to maintain the LTV ratio. An increase in the price may allow investors to repay the loan early or even access a higher loan amount. 

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Factors affecting the rise in gold prices

• Inflation Rate: It is considered one of the crucial factors which influences the online gold rate. When the rate of inflation rises, gold prices tend to increase as well. An increase in the gold price indicates high demand for the metal in the market.
• Gold Reserves: Like all central banks, the Reserve Bank of India (RBI) holds gold reserves for future use, which has a significant impact on gold prices. If the RBI decides to preserve its gold reserve, the gold rate will rise due to the decreased supply of gold in the market.
• Jewellery Market: The demand for gold items increases during the wedding and other festive seasons. Indians buy gold in tonnes during festivals like Diwali. During these festivities, the demand for gold increases, resulting in a rise in the gold price.
• Industrial Demand: Besides the jewellery market, the prices of gold also depend on how much gold electronic manufacturing companies buy. Every year, these companies purchase gold to use in electronic devices, such as televisions, mobile phones, and computers.   
• US Dollar: Gold rates rise are heavily dependent on the performance of the US dollar, with prices inversely proportional to the dollar’s value. This relationship stems from the fact that gold is a globally traded commodity, and the US dollar is the preferred international currency.

Benefits from the Rise in Gold Prices

• Wealth Preservation: A rise in gold prices preserves wealth during economic uncertainty and market volatility, as you can sell the old gold, which you bought at a lower rate.
• Capital Appreciation: Investing in gold may offer long-term capital appreciation. Although it does not generate quick profits, it is conducive in the long-term for enhancing returns while keeping portfolio volatility in check.
•  Portfolio Diversification: Investing in gold can reduce the overall portfolio’s risk by diversifying across various gold sectors, and adding to the portfolio may lead to stability in gold prices for investors.
•  Improved Trade Balance: If the gold price rises, it improves the terms of trade, especially for investors who rely on selling gold when the price increases, and countries that specialise in exporting goods also benefit from the rise in gold prices.     

Risk associated with the Rise in Gold Prices

• Hedge Against Inflation: One of the primary reasons why the gold price rises is its role as a hedge against inflation. When the cost of goods and services increases, the purchasing power of currency drops, but gold often retains its value.
• Effect on Jewellery Buyers: Rising gold prices make traditional jewellery purchases more expensive. For consumers, especially during festivals and weddings, it increases the demand for jewellery. 
• Pressure on Currency Value: Rising gold rates usually mean that the local currency (like INR or USD) is not strong, and it leads to higher import bills, especially for countries that import gold (like India).
• Negative Impact on Trade Balance: A Rise in gold rates leads to an increase in demand for imports, which in turn results in high cultural or investment preferences. Affecting the current account level and other preferences which impact the gold prices in India.
• Industrial Demand: Besides the jewellery market, the prices of gold also depend on how much gold electronic manufacturing companies buy. Every year, these companies purchase gold to use in electronic devices, such as televisions, mobile phones, and computers.   

Why Gold Prices are Rising during Diwali

As we know, Gold is considered essential for Indians on every occasion, especially during festive seasons or wedding celebrations. Regarding Diwali 2025 projections for precious metals, Chainani forecasts that by October 21, gold prices could reach $ 3,950-$ 4,000 internationally (₹1,20,000-₹1,22,000 on MCX), while silver might achieve $49-$50 (₹1,48,000-₹1,50,000), particularly if global tensions escalate. 

As Diwali approaches, jeweller and retail demand is expected to increase. Traditional peak buying during festivals and weddings could further exacerbate price increases, which are also influenced by global economic uncertainties. 

 For many, Diwali honours the Hindu goddess of wealth, Laxmi, so it’s no surprise that gold plays an essential part in the celebrations. Due to increasing demand and sometimes limited supply of gold, this will lead to a rise in gold prices, and other precious metals are also intensely involved in wedding decorations and traditions. 

How International Factors Influence Gold Prices in India

Gold prices in India are highly influenced by global market conditions, which lead to a rise in gold prices, primarily because India imports most of its gold. Consequently, changes in currency exchange rates significantly impact gold prices in India.

The impact due to international factors is: 

• US Dollar Vs INR Impact: Gold is globally traded in US dollars. When the Indian Rupee (INR) weakens against the dollar, the cost of importing gold increases, even if international prices remain stable.
• The Role of US Federal Interest Rates: The US Federal Reserve’s interest rate decisions have a significant impact on gold prices worldwide. When the Fed raises interest rates, US bonds and savings accounts become attractive.
• Import Duty and GST on Gold: India imposes a fundamental customs duty of 15% on gold imports (as of 2024, including Agriculture Infrastructure and Development Cess), along with a 3% Goods and Services Tax(GST) on the sale of gold.   

Calculation of Gold prices 

A gold rate calculator, also known as a gold price calculator, is an online tool that helps you determine the current value of your gold based on the current market gold rates. It helps to calculate the value of all gold items, such as jewellery, quickly and many others. A gold rate calculator enables you to determine the exact value of your gold jewellery, allowing you to review how the gold rate is increasing and by what percentage. So, it is considered the most effective tool for calculating the gold rate in India.

Formula for Gold Value Calculation 

Jewellers may calculate the gold rate using this effective formula for determining the value of the gold rate rise.

Final Jewellery Price =  Gold Price per Gram (22 or 18 Carat)* Weight in Grams + Making Charges per Gram + Goods and Services Tax (GST) on (Jewellery Price + Making Charges)

Conclusion

Gold holds significant value in India, deriving wealth, cultural heritage, and financial security. Gold continues to play a crucial role in today’s global economy, contributing to the improvement of the world’s economic health. As gold prices are affected by multiple factors, aspiring gold investors should not be too quick to buy, as it is not a simple matter of just buying more gold when times are bad, Investors need to work out how much gold is the right amount to purchase and how long they should be holding on it. They should also consider what form their gold investment should take. There are several ways for you to invest in gold. Some investors prefer investing in Gold Exchange-Traded Funds (ETFs), where they can invest in gold without owning the physical commodity (avoiding the risk of theft and burglary). 

FAQ

What are the factors influencing Gold Rates in India?

Ans. It is considered one of the crucial factors which influences the online gold rate. When the rate of inflation rises, gold prices tend to increase as well. An increase in the gold price indicates high demand for the metal in the market. Like all central banks, the Reserve Bank of India (RBI) holds gold reserves for future use, which has a significant impact on the price of gold. If the RBI decides to preserve its gold reserve, the gold rate will rise due to the decreased supply of gold in the market.

How is Gold Price Determined Worldwide?

Ans. Gold trading prices are driven by the dynamics of demand and supply. Factors such as inflation, the strength of the US dollar, geopolitical uncertainties, interest rates, and asset market movements also impact global gold prices. Gold trades 24/7 across global exchanges.

What is the trend of gold in future in India?

Ans. Gold prices are rising and extending their position, primarily breaching the $3,900 mark for the first time, supported by robust safe-haven demand and geopolitical factors. The gold price forecast for next week should only be used as a guide and not as a basis for making investment decisions. The gold price forecast for next week should only be used as a guide and not as a basis for making investment decisions. 

What are the popular gold investment options in India?

Ans. In India, popular gold investment options include physical gold (jewellery, coins, and bars). There are several ways for you to invest in gold. Some investors prefer investing in Gold Exchange-Traded Funds (ETFs), where they can invest in gold without owning the physical commodity (avoiding the risk of theft and burglary). 

How to calculate the gold loan values in India?

Ans. A gold rate calculator, also known as a gold price calculator, is an online tool that helps you determine the current value of your gold based on the current market gold rates. It helps to calculate the value of all gold items, such as jewellery, quickly and many others. Formula for Jewellery Price =  Gold Price per Gram (22 or 18 Carat)* Weight in Grams + Making Charges per Gram + Goods and Services Tax (GST) on (Jewellery Price + Making Charges)

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