The financial year 2024-2025 proved to be exceptional for gold, with prices soaring significantly in India. According to data from the Multi Commodity Exchange (MCX), Indian spot gold values skyrocketed by 32%, far surpassing the performance of the benchmark Nifty 50, which only saw a modest increase of just over 5%. Last March, gold was hovering around ₹67,000 per 10 grams, but it has now climbed to an impressive nearly ₹88,700. In the derivatives market, MCX Gold settled at ₹88,850 per 10 grams on March 28, marking a 0.05% rise.

Factors Driving Gold Prices in FY25

Several elements converged to elevate gold prices to unprecedented heights over the past year. The anticipation of potential rate cuts by the U.S. Federal Reserve, robust purchases by central banks, and fluctuating macroeconomic indicators contributed to this bullish trend. Geopolitical uncertainties, particularly those stemming from President Donald Trump’s aggressive tariff policies, have sparked fears of a looming global trade war, leading to increased inflation and a slowdown in global growth.

• Central Bank Purchases: Countries like China and other emerging markets have ramped up their gold reserves, tightening supply and boosting prices.
• Monetary Policy Changes: Expectations of lower interest rates have weakened the dollar, making gold more appealing.
• Inflation and Economic Concerns: Ongoing inflation worries have made gold a preferred hedge for investors seeking stability.

Renisha Chainani, the research head at Augmont, noted, “The surge in gold prices this fiscal year can be attributed to various factors, including geopolitical tensions and a decline in monetary policy rates. As conflicts escalate and trade uncertainties rise, demand for gold as a safe haven has intensified.”

Future Prospects: Will Gold Prices Reach ₹1 Lakh?

Looking forward, the outlook for gold in the upcoming financial year 2025-2026 appears optimistic, with expectations that prices could potentially reach the coveted ₹1 lakh per 10 grams. Chainani commented, “The outlook for gold remains positive, driven by ongoing geopolitical uncertainties and continued central bank acquisitions. Should interest rates decline further, the demand for gold might push prices to around $3,200.”

However, while positive indicators persist, current gold prices may already reflect many of these factors. For gold to hit the ₹1 lakh milestone, fresh catalysts will be essential. Here are some potential triggers that could influence prices:

• Escalation in Trade Wars: A deeper trade conflict could significantly impact gold demand.
• Tensions in Global Hotspots: Renewed conflicts in the Middle East or the ongoing situation between Russia and Ukraine could drive investors toward gold.
• Macroeconomic Indicators: Signs of stagflation in the U.S. could further bolster gold’s appeal.

Chainani forecasts that domestic gold prices could reach approximately ₹95,000 per 10 grams by the close of FY26, factoring in global uncertainties and inflationary pressures.

Conclusion: The Long-Term Appeal of Gold

While gold may experience short-term fluctuations, the fundamental demand for this precious metal remains strong. Investors will likely continue to find refuge in gold amid prevailing uncertainties, making it a compelling option for those looking to safeguard their assets in FY26.

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