The run-up—fuelled by central bank purchases, strong retail demand, and tariff-driven geopolitical jitters under US President Donald Trump—has lifted gold to record highs, far outpacing equities and the rupee. But with signs of consolidation emerging, experts warn that the spectacular gains seen in the past year may be behind us.
Gold has surged 54% to ₹115,510 per 10 gm in the past year through Monday evening, per Bloomberg, citing the active futures contract traded on commodity derivatives bourse MCX, a proxy for the spot price.
Outshining Nifty and rupee
The metal’s outperformance versus the rupee and the benchmark Nifty is glaring. The local currency has depreciated nearly 6% to 88.76/USD over the past year, while the Nifty shed 4.55% to 24,634.9 in the same period.
As India imports 700-800 tonnes of gold annually, local prices take cues from the international gold price. India’s net bullion imports stood at 801.5 tonnes against 802.8 tonnes of consumption last year, per the World Gold Council (WGC).
Indian investors bought over three-fifths of the 239.4 tonnes of bars and coins in the second half of 2024—76.7 tonnes in the September quarter and 76 tonnes in the December quarter—when prices averaged ₹74,248 per 10 gm, per MCX data cited by Bloomberg.
In the first half of 2025, when prices averaged ₹93,748 per 10 gm, investors purchased 92.8 tonnes. Based on Monday’s price of ₹115,510, investors who bought at an average rate of ₹74,248 in H2 2024 are sitting on a gross profit of 56%, while those who purchased in H1 2025 have earned about 23%.
Analysts urge caution
“Investors should take some profits off the table as gold is technically overdone,” said Gnanasekar Thiagarajan, director, Commtrendz, a commodity research firm. “Retail keen to hop on to the bandwagon should wait for declines before making fresh investments in gold.”
Agreed Naveen Mathur, director–commodity and currency, Gift City IFSC (Anand Rathi group). “While US tariffs and a weak dollar act as supportive factors, profit booking can’t be ruled out in the next few months, given the already stupendous 50%-plus rally in the past year. While those holding the metal for the long term can stay put, new entrants may be better off entering at lower levels over the next six months. Caution is advised,” he said.
Jewellers see shift
The Indian appetite for gold as an asset class has risen sharply, said Saurabh Gadgil, CMD, PNG Jewellers.
“Demand for bullion (gold bars and coins) as an investment has surged alongside the stellar rally. When prices veered around ₹85,000 months ago, the mix of jewellery to bullion at our 60-plus stores was 80:20, which has now changed to 60:40 and on some days is even 50:50. This trend of rising investment relative to jewellery is being seen across the country,” Gadgil said.
The shift began in 2024, when bullion demand rose 29% year-on-year to 239.4 tonnes, while jewellery demand fell 2% to 563.4 tonnes. About 64% of the bullion demand accrued in H2, as prices rose gradually alongside uncertainty over Trump’s proposed tariffs.
Geopolitics and outlook
Average prices climbed from ₹67,615 per 10 gm in H1 2024 to ₹74,248 in H2 when Trump won the presidential race. With Trump imposing 50% tariffs on India, 30% on China, and a one-time $100,000 fee on new H-1B visas, the average price this year has hit ₹93,748.
According to Shekhar Bhandari, president and head of SME Banking, Kotak Mahindra Bank, prices might be peaking. “With a likely easing of geopolitical tensions, better global economic performance, and slower central bank buying, “gold in USD terms could trade between $3,750 and $3,950 per ounce (31.10 gm).”
Globally, central bank gold demand rose from 450.1 tonnes in 2021 to more than a thousand tonnes annually over the next three years, with 2024 demand at 1,181.9 tonnes.
