Gold has just broken every record, soaring past ₹1,13,000 per 10 grams for the first time ever—marking an extraordinary 48% surge over the past year. From central banks in emerging economies to everyday investors seeking security, the yellow metal is attracting unprecedented demand. Even seasoned analysts are turning more bullish.
But what’s fueling this extraordinary rise—and what does it mean for investors and the broader economy?
Key Drivers of the Gold Rally
1. Real Interest Rates & Fed Policy
With real (inflation-adjusted) interest rates trending low or negative, the opportunity cost of holding gold has fallen sharply.
Softer U.S. inflation data and slowing job growth have increased expectations of Fed rate cuts, weakening the dollar and boosting gold’s appeal.
2. Global Uncertainty & Central Bank Buying
Geopolitical tensions (Ukraine, Middle East) and fears of stagflation continue to push investors toward safe-haven assets.
Central banks remain aggressive buyers: Q1 2025 saw 244 tonnes of purchases, after a record 1,086 tonnes in 2024. Nearly 76% of central banks expect to further increase holdings over the next five years.
3. Currency Pressure & Indian Factors
The rupee’s ~3% depreciation YTD has amplified the domestic rally, with Indian gold prices rising ~44% in 2025 alone.
Seasonal factors—festival and wedding demand—continue to fuel imports, while ETFs and investment demand have surged.
The government’s recent GST cuts on consumer goods may indirectly boost household capacity to buy gold.
The Bottom Line
From the Russia-Ukraine war and U.S. banking stress in 2023 to the current global trade frictions, every shock has reinforced gold’s role as the ultimate safe haven. Risks remain—particularly if real interest rates rise or geopolitical tensions ease—but the combination of limited supply, aggressive central bank buying, and ongoing uncertainty suggests that gold’s strength may be more than a short-lived spike.
