University of Kwazulu-Natal

Unpacking The Reasons Why Gold Prices Are Rising Globally And In India

Bonisiwe Shabane
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unpacking the reasons why gold prices are rising globally and in india

In 2025, gold prices have hit unprecedented levels, capturing both investor focus and global headlines. One would expect this sharp surge to be a fleeting market trend, but it actually is a result of a confluence of economic, geopolitical, and monetary factors. For a country like India, where gold is deeply rooted in cultural traditions and monetary forces, the abnormal price hike is more than just a statistic. It impacts households, businesses, and the broader economy. With every headline screaming questions like, “why gold price is increasing” or “why gold rate is increasing in India” it’s crucial to examine the underlying causes of this sustained price hike. This blog dives into the trends, the numbers, and the gold price rise reason dominating the market conversation.

It also addresses the pressing question: will gold price increase further in the months ahead? But before that, let’s understand the gold price trends in India over the last few years. According to a 1st April 2025 Forbes India report, over the past five years, gold prices in India have shown a consistent upward trajectory: Gold and silver prices jumped to a record high on Tuesday as investors moved more money into precious metals amid global uncertainty. While gold is often seen as a safe place for money during times of stress, silver has also performed surprisingly well this year. The latest rise shows how worried many investors remain about inflation, interest rates, and global risks.

In the early hours of Tuesday, spot gold rose 0.5% to $4,467.66 per ounce, after touching a fresh record of $4,469.52 earlier in the session. US gold futures for February delivery also moved higher, rising 0.74% to $4,502.30 per ounce. Silver prices were also firm, with spot silver up 0.19% at $69.15 per ounce. It had hit an all-time high of $69.44 on Monday. This year has been very strong for both metals. Gold has gained about 70% so far in 2025 and crossed the $4,400 level for the first time on Monday.

Silver has done even better, rising around 140% since the start of the year and moving close to the $70 mark. One key reason behind the rally is the growing belief that the US Federal Reserve could cut interest rates next year. Lower rates reduce the return from bonds and savings, making non-interest assets like gold and silver more attractive. Gold and silver prices surged to record highs this week, sending ripples across global commodity markets and sparking renewed interest from retail and institutional investors alike. Analysts say a confluence of macroeconomic, geopolitical, and technical factors are behind the unprecedented rally in these traditional safe-haven assets. The first driver cited by market watchers is heightened geopolitical uncertainty.

Escalating tensions in multiple regions have fueled demand for metals that typically appreciate during crises. Second, persistently high inflation in major economies has eroded confidence in fiat currencies. Despite central banks maintaining aggressive interest rates, consumer prices continue to outpace expectations. Precious metals, which historically retain value when inflation bites, are attracting capital that might otherwise sit in cash or bonds, as per market watchers. A third factor, according to market watchers, is the weakening US dollar. Since metals like gold and silver are priced in dollars, a softer greenback makes them cheaper for holders of other currencies.

Over the past month, the dollar index has slid to multi-month lows, amplifying appetite for precious metals across Asia and Europe. Also Read: Gold Hits Record High On US Fed Rate-Cut Bets; Silver Scales Fresh Peak | Republic World Updated on: December 23, 2025 / 7:51 AM EST / CBS News Gold prices soared above $4,400 on Monday to reach a new all-time high, as analysts pointed to rising geopolitical tensions and softer monetary policy as key drivers of the surge. The price of the precious metal traded at $4,475 per ounce at 4 p.m. EDT after hitting a high of $4,477 per ounce earlier in the day.

The asset has risen more than 70% since the start of this year. Gold is viewed as a safe-haven investment and typically acts as a hedge against inflation. "The metals trade has been strong all year, and particularly for gold," Bret Kenwell, a U.S. investment and options analyst at eToro, told CBS News. "As its fundamentals remain intact, gold digested its recent rally to all-time highs quite well." Silver prices were also rallying on Monday, reaching $69 by 4 p.m.

EDT. The metal is up 130% since the start of the year. The price of gold has soared nearly 70% this year. The prices of gold and silver hit record highs on Monday, extending a banner year for the precious metals. Gold has risen 10% over the past month and nearly 70% in 2025. As of midday Monday, the price of gold topped $4,470 per ounce.

Silver bested its amber counterpart over that span, jumping almost 40% over the last month and 134% this year. Heightened geopolitical and economic uncertainty have boosted demand for gold and silver, which typically display a degree of independence from movements in stock prices, some analysts told ABC News. Volatility in bond markets and a devaluation of the U.S. dollar, meanwhile, have unsettled alternative assets typically viewed as safe-haven investments. Gold prices have surged to record all-time highs of ₹109,475 per 10g in India. On MCX, it is hovering around ₹109,028 per 10g and globally above $3,645/oz, up 40% year-to-date as of September 10, 2025.

This is happening due to a combination of festive demand, expectations of Fed rate cuts, weakening dollar, global slowdown fears, geopolitical tensions, and central bank buying. While some consumer jewellery demand may slow at these elevated levels, investment demand remains strong, reinforcing gold’s safe-haven status. Here are nine critical reasons why gold prices are rising: 1. Domestic festive and wedding season demand Not only at the international level, but also at the domestic level, according to Aksha Kamboj, Vice President, IBJA and Executive Chairperson, Aspect Global Ventures, there is strong domestic buying interest as the festive...

As Navratri and Diwali, along with the wedding season, approach, seasonal demand traditionally boosts jewellery purchases, although record-high prices may deter some price-sensitive households. 2. Expectations of U.S. Federal Reserve rate cuts Gold prices continue their record-breaking rally, with spot rates climbing to an all-time high of $3,300 per ounce. Domestically, MCX gold futures surged to a historic high of ₹95,000 per 10 grams, reflecting the strength of the global uptrend.

24K gold traded at ₹95,170 per 10 grams, while 22K gold stood at ₹87,190 per 10 grams in the domestic market. In a significant revision, Goldman Sachs has raised its gold price forecast to $3,700 per ounce by the end of 2025, citing robust investor demand and sustained central bank purchases. The investment bank also flagged a potential high-risk scenario where gold could touch $4,500 per ounce, should global macroeconomic conditions deteriorate sharply. As geopolitical risks escalate and economic indicators remain volatile, gold is once again cementing its position as a preferred safe-haven asset. Here’s a closer look at the five key factors driving the current surge in gold prices. Gold prices surged to fresh all-time highs this week, propelled by heightened global economic uncertainty, US-China trade tensions, rising US recession risks, weakened dollar, robust central bank amping gold reserves, and increased inflows into...

Gold’s latest rally is closely tied to recent weakness in the U.S. dollar, which has made the precious yellow metal more attractive to global investors. The U.S. dollar index (DXY)—which measures the greenback against a basket of major currencies—slipped below the psychological 100 mark. A “weak dollar” refers to a decline in the value of the U.S. dollar relative to other global currencies.

Gold prices have surged to record highs in 2025, defying the traditional inverse relationship with interest rates. Typically, gold prices rise when interest rates fall and vice versa. But in 2025, gold has broken through the $3,500 mark, extending its rally even as interest rates remain high, with no cuts from the Fed yet this year. A question on many investors' minds is whether the recent rise in gold prices will continue. Many factors have contributed to this rise, and monitoring these six areas can provide insight into gold’s performance: One of the key factors driving the recent surge in gold prices is the weakening U.S.

dollar. The U.S. Dollar Index, which measures the dollar against a basket of six major foreign currencies, has been hovering around 100 as of late May, marking a nearly 8% decline year-to-date. A weaker dollar benefits gold in two significant ways: it reduces the cost of gold for foreign buyers and may signal broader concerns about the U.S.’s position as an economic leader. In a confluence of events, U.S. Treasuries are also experiencing upward pressure, with 10-year yields breaching 4.50% and 30-year yields at around 5% as of late May.

This atypical scenario of climbing yields and a depreciating dollar reflects a notable shift in investor sentiment toward U.S. assets. Investors are increasingly exploring non-traditional U.S. investments, with gold emerging as a favored option. While inflation has seen a modest decrease in the last two months, the current rate of 2.3% remains above the Federal Reserve’s 2% target. Investors are cautious of the potential for inflation to erode the purchasing power of their currency and many are turning to gold as a hedge.

The precious metal is known for maintaining its value over time, making it an appealing option in times of inflation. Lecturer in Economics, University of Sydney Luke Hartigan receives funding from the Australian Research Council (DP230100959). University of Sydney provides funding as a member of The Conversation AU. The price of gold surged above US$4,100 (A$6,300) an ounce on Wednesday for the first time, taking this year’s extraordinary rally to more than 50%. The speed of the upswing has been much faster than analysts had predicted and brings the total gains to nearly 100% since the current run started in early 2024.

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