Gold hits Rs 1 lakh mark amid global uncertainty; will prices drop after Akshaya Tritiya?

Hyderabad: Gold prices have surged to Rs 1 lakh per 10 grams in India, driven by global economic turmoil and rising investor anxiety.

This sharp rise comes just before the auspicious occasion of Akshaya Tritiya, which falls on April 30, sparking widespread debate over whether the rally will continue or if a steep correction is imminent.

Contradicting forecasts

A week ago, market speculation suggested that gold could potentially drop to Rs 55,000 per 10 grams in India, and from $3,080 to $1,820 per ounce globally. These contrasting forecasts have confused the public, especially since gold holds both cultural and financial value in Indian households, valued equally as an ornament and a secure investment.

Today’s gold price is Rs 110,737.70 per tola.

Speaking to NewsMeter, market analysts estimate a 90 per cent likelihood that prices may continue to climb, with only a slim 10 per cent chance of a drop. Whether this trend continues post-Akshaya Tritiya remains to be seen, but current signals suggest the upward momentum could persist.

Why are gold prices rising?

1. Geopolitical tensions and economic instability:

Ongoing trade disputes, particularly between the US and China, have created global economic uncertainty. Investors are increasingly turning to gold as a safe-haven asset to shield themselves from market volatility and downturns.

2. Weakening US dollar:

The US Dollar Index has dropped to its lowest levels since 2021. A weaker dollar makes gold more attractive for investors using other currencies, as the opportunity cost of holding gold declines.

3. Central bank buying:

Countries like China have been ramping up gold purchases as part of a diversification strategy away from the US dollar. These consistent acquisitions from central banks are driving prices higher.

4. Inflation and interest rate expectations:

Persistent inflation concerns and the potential for interest rate cuts by the US Federal Reserve have spurred demand for gold as a store of value. Lower interest rates also diminish the appeal of bonds, making gold a more favourable alternative.

5. Domestic factors in India:

The depreciation of the Indian rupee against the US dollar has made imported gold costlier. Meanwhile, a shift in investor preference from volatile equities to gold-backed ETFs has further boosted demand, especially given recent underperformance in the stock market.

All these global and domestic elements are contributing to a bullish trend in gold, reflecting investor sentiment that favours stability during uncertain times.