Outlook Business Desk
After declining for two straight days, gold prices rose by Rs 550 to Rs 87,710 per 10 grams on March 8. The price of the precious yellow metal has been surging globally this year.
In the global market, gold prices stand at $2,911.17 per ounce today, according to Goldprice.org. Their data shows that the commodity has surged over 34% in the last year and about 16% in the last six months alone. Goldman Sachs analysts predict an additional 8% increase this year, with prices potentially reaching $3,100 per ounce.
According to analysts, most of the gains in gold prices are driven by uncertainty surrounding US President Donald Trump’s tariff threats. His executive order imposing "reciprocal tariffs" takes effect on April 2, 2025. He has also flip-flopped on several occasions regarding a 25% import tax on Canada and Mexico and a 10% tax on Chinese goods.
Gold’s recent surge began with the US Federal Reserve’s actions. As inflation peaked at 9.1% in June 2022, the Fed hiked rates until July 2023, then held them steady until September 2024. With rate cuts expected again, investors turned to gold, driving prices up from February 2024.
Central banks, which hold billions in gold reserves, drove another wave of demand, especially during geopolitical tensions. In the past three years, central banks bought over 1,000 tonnes annually, hitting a record 1,180 tonnes in 2024, up from 1,082 tonnes in 2022 and 1,037 tonnes in 2023.
India was the second-largest buyer in 2024, acquiring 72.60 tonnes, behind Poland’s 89.54 tonnes. China bought 44.17 tonnes. As of September 2024, the Reserve Bank of India held 854 metric tonnes of gold.
During geopolitical instability, gold demand rises sharply, particularly after events like Russia’s invasion of Ukraine and increasing tensions between Israel-Hamas. Such conflicts create uncertainty, prompting investors and central banks to buy more gold, which boosts demand and drives up prices.
Gold demand surged after the 2020 pandemic, driving prices higher. The increase was fueled by Jewellery fabrication, technology, investments, and central banks. In 2024, total gold demand reached a record 4,974 tonnes, with its highest-ever total value of $382 billion.