Gold prices have recently hit an unprecedented peak, soaring by ₹1,100 to reach ₹92,150 per 10 grams in the national capital, as reported by the All India Sarafa Association. This surge is attributed to a combination of rising global precious metal prices, increasing economic uncertainties, and heightened investment demand. With FY25 witnessing a significant jump of ₹23,730 or 35% since April 1 of the previous year, investors are closely monitoring the evolving market landscape.

Global Factors Driving Gold Prices

The latest surge in gold prices marks the third consecutive session of gains, with 99.5% purity gold climbing to ₹91,700 per 10 grams, following a closing price of ₹90,600 in the previous session. As Vinod Nair, Head of Research at Geojit Investments, noted, "Gold prices have surged as investors flock to safe-haven assets amid escalating trade tensions. The upcoming week promises more clarity on tariff developments, which will help investors gauge their impact on the global economy."

• Key economic indicators to watch include:
  • U.S. Job openings data
  • India’s PMI

These indicators will provide valuable insights into economic momentum in both regions.

Upcoming Festivals and Gold Demand

With Gudi Padwa just around the corner and Akshay Tritiya approaching, these festivals typically see a spike in gold purchases. However, with prices at record highs, experts suggest that demand might be subdued. Many buyers are opting to exchange old gold for new rather than making fresh purchases, enabling them to maintain liquidity while honoring traditions.

As Chintan Mehta, CEO of Abans Financial Services, explained, "Gold’s recent rally is largely driven by central bank accumulation and global uncertainties, particularly those stemming from trade tensions. We anticipate that once clarity emerges post-April 2, following tariff announcements, gold’s allure as a safe-haven asset might diminish, potentially tempering its rally."

Future Price Predictions and Investment Strategies

Traditionally, occasions like Gudi Padwa boost gold purchases, and experts predict that this could further elevate prices due to increased demand. However, there’s a cautionary note regarding the current high prices, which may lead to decreased demand as investors consider selling existing holdings.

Sriram Iyer, a senior analyst in commodities at Reliance Securities, stated, "While we expect further price appreciation, with predictions of gold reaching ₹93,000 per 10 grams by the end of 2025, a strategic approach would be to invest during dips rather than at peak prices."

Caution Advised for New Investors

Mehta also advises potential investors to tread carefully, considering the likelihood of a price correction. "Gold has already provided approximately 17% returns just three months into the year. Given the sharp rise in prices, the risk-reward ratio for new investments is becoming less favorable. A more prudent strategy would involve phased buying or waiting for a correction."

In summary, while the allure of gold as a stable investment remains, the current market conditions suggest a cautious approach for new investors, particularly as we approach significant festive buying seasons.