Gold prices have seen significant volatility recently and are expected to experience further shifts during the upcoming festive season, driven by strong festive demand and a complex interplay of global factors. The prices are set to be affected by geopolitical tensions and trade tariffs, creating a dynamic market environment just as major festivals like Dhanteras and Diwali are set to begin. This period is a critical time for the gold market in India, where buying gold is not only a cultural tradition but also a strategic investment.
Commenting on the price volatility, Surendra Mehta, Secretary of the India Bullion & Jewellers Association Ltd, stated, “Gold prices are likely to be volatile due to geopolitical issues between Ukraine-Russia, and the US administration shutdown. The central banks have not stopped buying gold, which is also one of the reasons for the price surge. On the other hand, the Fed has also announced that they would be doing rate cuts in the near future and we can expect gold prices to reach around Rs1,27,000 excluding GST. Coming to Silver, it will be around Rs 1,57,000 without GST.”
This assessment points to a confluence of factors boosting gold’s appeal as a safe-haven asset. Ongoing geopolitical instability, coupled with a US government shutdown and continuous gold purchases by central banks, creates a favorable environment for the precious metal. The anticipation of future rate cuts by the Federal Reserve also makes non-interest-bearing assets like gold more attractive.
This sentiment is echoed by Jigar Trivedi, Senior Research Analyst at Reliance Securities, who commented, “Gold hovers near a record peak amid escalation of the US China trade tensions.” He detailed the specific market movements, noting that “Gold prices rose to $4,050/oz on Monday, hovering near a record high hit earlier in the session, as renewed US-China trade tensions and broader economic uncertainty boosted safe-haven demand.”
He explained that President Trump’s initial threats to impose a 100% tariff on Chinese exports created a wave of uncertainty, which was only partially mitigated by his later, softer stance. Such unpredictable policy signals are a key driver of market sentiment, leading investors to seek the security of gold.
The global volatility, however, is meeting a uniquely Indian phenomenon: festive demand. In India, the purchase of gold during Dhanteras and Diwali is deeply rooted in tradition and is considered auspicious. This consistent demand, particularly for physical gold, acts as a strong support for prices. Even in times of high cost, consumers are often willing to buy, viewing it as both a symbol of prosperity and a long-term investment.
This year, the combination of a strong domestic buying season and an environment of global uncertainty is expected to create significant price movements. While the international factors may push prices upward, the sustained domestic demand will ensure that the market remains robust, reinforcing gold’s status as a dual-purpose asset—a cultural cornerstone and a financial safe-haven.
