Gold Prices Surge as Market Anticipates Akshaya Tritiya

In a significant development for gold enthusiasts, the precious metal reached a monumental ₹1 lakh per 10 grams in retail markets on Monday. This surge comes just ahead of Akshaya Tritiya, a day renowned in India for gold purchases. The rise in gold prices reflects broader market trends, as investors navigate a landscape marked by geopolitical tensions and economic uncertainty.

Record Highs in Gold Trading

On the Multi Commodity Exchange (MCX), the gold contract for August delivery saw a remarkable increase, climbing by ₹2,048, or 2.1%, during mid-session trading. This leap brought gold to an unprecedented all-time high of ₹1,00,000 per 10 grams. According to Manav Modi, Senior Analyst at Motilal Oswal Financial Services Ltd, gold has experienced gains exceeding 20% recently, setting records on both MCX and COMEX platforms. This year has proven to be particularly volatile for gold, surprising many market analysts.

Expert Insights on Market Dynamics

Modi suggests that the volatility in gold prices is likely to persist. He advises risk-tolerant traders to capitalize on the current rally, while more cautious investors may want to wait for price dips to enhance their holdings. He predicts that gold could potentially reach between $3,350 and $3,500, with the possibility of rallying to $3,700 over time. Given the assumption of USDINR at 85, he expects immediate domestic ranges to hover around ₹96,500 to ₹1,00,000, with a long-term target of ₹1,06,000.

Factors Driving Gold’s Price Surge

Several key factors are contributing to the current rise in gold prices:

• Geopolitical Tensions: The intensifying U.S.-China trade war has led to tariffs soaring to 125% on American goods and 145% on Chinese exports. This ongoing conflict, coupled with instability in regions like the Middle East and Eastern Europe, is heightening global economic uncertainty, driving investors toward gold as a safe haven.

• Weakening U.S. Dollar: The appeal of gold has intensified due to a declining U.S. dollar. As the U.S. dollar index (DXY) dips below the critical 100 mark, gold becomes more attractive to international buyers. Concerns about a potential U.S. recession, exacerbated by recent tariff increases, have further unsettled markets and shifted preferences toward gold.

• Economic Recession Fears: Heightened fears of a U.S. recession have pushed gold prices upwards. With the Federal Reserve signaling potential interest rate cuts, the allure of gold increases, as lower rates typically enhance demand. Goldman Sachs has raised the probability of a recession to 45% within the year, indicating a worrying economic outlook.

Growing Interest in Gold ETFs

As geopolitical tensions rise and gold prices soar, investment in gold ETFs is also on the upswing. Recent reports from ICRA Analytics indicate a staggering 98.54% year-on-year increase in ETF inflows, which reached ₹1,979.84 crore in February 2025, up from ₹997.21 crore during the same period the previous year. Investors are drawn to gold ETFs for their liquidity, transparency, cost-effectiveness, and ease of trading compared to physical gold.

Central Banks Increasing Gold Reserves

In response to ongoing dollar instability, many central banks, particularly in Asia, are ramping up their gold reserves. The World Gold Council (WGC) reports that central banks acquired over 1,000 tonnes of gold in 2024, marking the third consecutive year of significant accumulation. The latest Gold Demand Trends report from the WGC indicates that net gold purchases by central banks reached 1,037 tonnes, underscoring a strategic pivot away from the U.S. dollar and toward enhanced financial security amid rising geopolitical and economic uncertainties.

As gold continues to shine amid global economic turbulence, investors are keenly watching market trends and expert forecasts to navigate their next moves.