Gold Prices Surge Again: What’s Driving the Bullion Market?

Gold Prices Reach New Heights

New Delhi: For the second consecutive day, gold prices have risen, increasing by Rs 2,650 to reach a new high of Rs 1,40,850 per 10 grams in the national capital on Tuesday, as reported by the All India Sarafa Association. This follows a closing price of Rs 1,38,200 per 10 grams on Monday.

Since the beginning of the year, gold prices in the domestic market have surged by Rs 61,900, marking a significant rise of 78.40% from Rs 78,950 per 10 grams recorded on December 31, 2024.

Silver also experienced a notable increase for the second day, climbing Rs 2,750 to reach a record price of Rs 2,17,250 per kilogram, including all taxes. The previous session saw silver settle at Rs 2,14,500 per kg after a remarkable rise of Rs 10,400 per kg.

According to Saumil Gandhi, Senior Analyst – Commodities at HDFC Securities, "An unprecedented rally continues in bullion, with spot gold nearing another milestone at the USD 4,500 mark. The latest surge is fueled by expectations of multiple rate cuts by the Federal Reserve in 2026, coupled with escalating geopolitical tensions that enhance the safe-haven appeal of gold and silver."

Throughout the year, silver prices have increased by Rs 1,27,550, or 142.2%, from Rs 89,700 per kilogram recorded on December 31, 2024.

On Tuesday, spot gold rose by USD 54.3, or 1.22%, reaching a record of USD 4,498 per ounce in international markets. Praveen Singh, Research Analyst at Mirae Asset ShareKhan, noted, "Gold has extended its sharp rally to almost USD 4,500 per ounce due to geopolitical concerns and a weaker dollar, as markets anticipate more than two rate cuts from the Federal Reserve next year."

This year, spot gold prices have surged by USD 1,892.23, or 72.62%, from USD 2,605.77 per ounce recorded on December 31, 2024.

Meanwhile, spot silver increased by 1.4%, surpassing the USD 70-per-ounce mark for the first time in overseas trading. Year-to-date, silver prices have soared by USD 41.03, or 141.62%, from USD 28.97 per ounce recorded on December 31, 2024.

Investors are now focusing on the upcoming second estimate of the third-quarter US GDP data, which is expected to provide insights into the US economy's health and the future direction of the Federal Reserve's monetary policy, according to Renisha Chainani, Head – Research at Augmont.