Key Global Factors Driving Price Surge

• Geopolitical Tensions: Rising global conflicts and economic uncertainties have led investors to flock to gold, which is seen as a safe-haven asset.
• US Federal Reserve Rate Cuts: With falling interest rates, the appeal of gold increases. As a non-yielding asset, gold becomes more attractive when the opportunity cost of holding cash or bonds drops. 
• Weakening of the US Dollar: A declining dollar makes gold cheaper for buyers using other currencies, thereby boosting demand.
• Central Bank Accumulation: Central banks, especially in Asia, are aggressively purchasing gold to reduce dependency on the US dollar and diversify reserves.

India’s Gold Market 

• India is the world’s 2^nd largest consumer of gold, just after China. In 2024, India's gold demand reached 802.8 tonnes.
• Approximately 85% of India’s gold is imported, making domestic prices highly sensitive to international trends.

Reasons for High Gold Demand in India

• Financial Security: Gold is trusted as a long-term store of value, especially during inflation or market instability.
• Cultural & Religious Significance: Gold is considered auspicious and forms an essential part of festivals like Diwali, Dhanteras, and Akshaya Tritiya.
• Wedding Season Boost: Gold purchases spike during wedding season, with jewelry being a traditional and prestigious gift for brides.
• In rural many people lack access to banks/stock markets. For them, gold serves as a trusted and liquid asset for saving, investing, or even borrowing.