<p class="bodytext">Gold prices have touched record levels in domestic (Rs 1,32,075 per 10 grams on Monday) and global markets in recent weeks, driven by various economic and geopolitical factors. The prices have remained volatile with an upward bias. Geopolitical tensions over the last few months and the possibility of an interest rate cut by the US Federal Reserve have kept gold bullish. It has seen a 61% increase in prices this year. The prices of silver have also been racing, gaining about 90% this year. Gold and silver have made more gains than all other savings and investment avenues, such as stocks and fixed deposits. The past few months have seen record inflows in gold-backed exchange-traded funds. A fear of missing out in the rally has also been fuelling the momentum.</p>.<p class="bodytext">Gold has always been the safe-haven asset in times of economic trouble, political turmoil, and social upheaval. Its stability and global liquidity have ensured a universal acceptability. It has had an inverse relationship with the US dollar – the reason why it gained when the dollar weakened. If the US economy improves and the dollar rises, the gold prices may move down. If the central banks sell gold, that could also impact its prices. But the Reserve Bank of India (RBI), which holds a record stock of around 879 tonnes, is not likely to dispose of any part of its gold. The share of gold in India’s foreign exchange reserves has gone up to 14%. Even when gold prices have declined after a steady rise, they have never retraced their upward journey or fallen substantially. That is one of the reasons for its enduring attraction.</p>.<p class="bodytext">Gold continues to hold immense value in terms of personal wealth, social stature, and family assets – in India, it also comes with a psychological attraction. The country is the world’s second largest consumer of gold, after China, and weddings here are also occasions to display the yellow metal. The festive season is on, and the impact of the soaring prices is yet to be known. Usually, a surge in prices slackens demand for some time, but the market comes back to normal business soon. The import of gold at high prices results in a greater drain of foreign exchange when trade equations are working against the country due to the ongoing tariff war. The campaign to reduce the attraction for gold, which is a non-productive asset, has not worked, and the metal has only become dearer.</p>
<p class="bodytext">Gold prices have touched record levels in domestic (Rs 1,32,075 per 10 grams on Monday) and global markets in recent weeks, driven by various economic and geopolitical factors. The prices have remained volatile with an upward bias. Geopolitical tensions over the last few months and the possibility of an interest rate cut by the US Federal Reserve have kept gold bullish. It has seen a 61% increase in prices this year. The prices of silver have also been racing, gaining about 90% this year. Gold and silver have made more gains than all other savings and investment avenues, such as stocks and fixed deposits. The past few months have seen record inflows in gold-backed exchange-traded funds. A fear of missing out in the rally has also been fuelling the momentum.</p>.<p class="bodytext">Gold has always been the safe-haven asset in times of economic trouble, political turmoil, and social upheaval. Its stability and global liquidity have ensured a universal acceptability. It has had an inverse relationship with the US dollar – the reason why it gained when the dollar weakened. If the US economy improves and the dollar rises, the gold prices may move down. If the central banks sell gold, that could also impact its prices. But the Reserve Bank of India (RBI), which holds a record stock of around 879 tonnes, is not likely to dispose of any part of its gold. The share of gold in India’s foreign exchange reserves has gone up to 14%. Even when gold prices have declined after a steady rise, they have never retraced their upward journey or fallen substantially. That is one of the reasons for its enduring attraction.</p>.<p class="bodytext">Gold continues to hold immense value in terms of personal wealth, social stature, and family assets – in India, it also comes with a psychological attraction. The country is the world’s second largest consumer of gold, after China, and weddings here are also occasions to display the yellow metal. The festive season is on, and the impact of the soaring prices is yet to be known. Usually, a surge in prices slackens demand for some time, but the market comes back to normal business soon. The import of gold at high prices results in a greater drain of foreign exchange when trade equations are working against the country due to the ongoing tariff war. The campaign to reduce the attraction for gold, which is a non-productive asset, has not worked, and the metal has only become dearer.</p>
