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The recent surge in gold prices, witnessing a remarkable 30% increase over the past year, has cast a noticeable shadow over local demand for jewellery. This phenomenon is particularly evident in India, a nation deeply intertwined with gold's cultural and economic significance. The elevated prices have tempered enthusiasm for even the most auspicious occasions, such as weddings, which traditionally represent the bedrock of the jewellery market. Consumers, mindful of the heightened costs, are increasingly opting for lightweight jewellery, reflecting a pragmatic adjustment to the prevailing economic climate. The upcoming Akshaya Tritiya, a day revered as the most propitious for gold purchases throughout the year, is expected to witness subdued activity, a stark contrast to previous years. The prevailing local prices for 24-carat gold, currently hovering around a substantial Rs 95,000 per 10 grams, are projected to potentially breach the Rs 100,000 threshold by Akshaya Tritiya, scheduled for April 30th. This anticipated price surge further exacerbates the affordability challenges faced by prospective buyers, casting a pall over the traditionally vibrant gold market. The director of Popley Group, Rajiv Popley, acknowledges the adverse impact of soaring gold prices on jewellery affordability, while simultaneously asserting that demand has remained consistent. However, he concedes that replicating last year's impressive sales volumes will be a daunting task, given the current market dynamics and elevated price levels. The international gold market mirrors this upward trajectory, with prices currently situated in the vicinity of $3,327 an ounce. This surge has been attributed to a confluence of factors, including the ongoing turmoil in the financial markets and the weakening of the US dollar, exacerbated by the Trump administration's aggressive implementation of tariffs on imports into the United States. These macroeconomic forces have collectively propelled gold prices to unprecedented levels, influencing both consumer behavior and investment strategies. The role of central banks in bolstering gold prices cannot be overlooked. These institutions have been actively accumulating gold reserves, collectively purchasing over 1,000 tonnes of gold for three consecutive years leading up to 2024, according to data released by the World Gold Council. This strategic accumulation underscores gold's enduring appeal as a safe-haven asset, particularly during times of economic uncertainty and geopolitical instability. The global rally in gold prices remains unabated, with the period spanning 2024-25 generating returns of 39.75%, marking the highest returns witnessed in four decades, as indicated by data from Kedia Commodities. Since the commencement of the year, prices have risen by a remarkable 27%, underscoring the continued momentum driving the gold market. Goldman Sachs projects that gold prices could potentially reach $4,500 per ounce by the end of 2025 in a high-risk scenario, reflecting the growing perception of gold as an increasingly attractive asset class. The escalating tariff uncertainty, coupled with concerns surrounding weaker economic growth, elevated inflation, and persistent geopolitical risks, has further strengthened the case for allocating capital to gold. Joni Teves, a strategist at UBS, emphasized the growing importance of gold as a safe investment haven in light of the evolving global trade, economic, and geopolitical landscape. This sentiment reflects the broader consensus among market analysts and investment professionals regarding gold's enduring value as a hedge against risk and uncertainty.
India, a nation renowned for its insatiable appetite for gold, ranks among the top importers of the precious metal, alongside electronics and machinery, excluding oil. In 2024-25, India's gold imports amounted to a staggering $63.3 billion, representing a substantial 39% increase compared to the previous year. This surge in imports underscores the continued demand for gold within the Indian market, despite the prevailing high prices. The spot prices of gold witnessed a remarkable 32% surge in 2024-2025, according to data from the Multi Commodity Exchange of India (MCX), significantly outperforming the equity benchmark Nifty 50, which recorded a modest gain of just over 5%. This disparity in performance highlights gold's resilience and attractiveness as an investment alternative during periods of market volatility and uncertainty. Despite the prevailing bullish sentiment surrounding gold, some analysts anticipate a potential slowdown in the rally. Ajay Kedia, director of Kedia Advisory, believes that prices may peak at $3,520 per ounce before experiencing a subsequent downtrend, potentially reaching levels as low as $2,700 per ounce or even $2,340 per ounce. This perspective underscores the inherent volatility of the gold market and the importance of exercising caution when making investment decisions. The interplay of supply and demand dynamics, macroeconomic factors, and geopolitical events will ultimately determine the future trajectory of gold prices. The current scenario presents a complex and multifaceted landscape for the gold market, characterized by surging prices, dampened consumer demand, increased central bank accumulation, and evolving investment strategies. The long-term outlook for gold remains subject to uncertainty, with various factors potentially influencing its future performance. Investors and consumers alike must carefully navigate this dynamic environment, weighing the potential risks and rewards associated with gold investments.
The intricate relationship between gold prices and demand for jewellery in India is a critical aspect of the nation's economic and cultural fabric. Gold holds a unique position in Indian society, transcending its purely economic value to encompass profound cultural and religious significance. It is an integral part of weddings, festivals, and other auspicious occasions, symbolizing prosperity, good fortune, and familial bonds. The elevated gold prices have therefore created a dilemma for many Indian consumers, forcing them to re-evaluate their traditional purchasing habits. The shift towards lightweight jewellery reflects a pragmatic response to the affordability challenges, highlighting the sensitivity of demand to price fluctuations. The subdued expectations for Akshaya Tritiya underscore the potential impact of high gold prices on consumer spending during traditionally peak periods. The role of international factors in shaping gold prices cannot be overlooked. The turmoil in the financial markets, the weakening US dollar, and the imposition of tariffs by the US have all contributed to the upward pressure on gold prices. These global forces underscore the interconnectedness of the gold market and the vulnerability of domestic consumers to external economic shocks. The strategic accumulation of gold reserves by central banks further reinforces the perception of gold as a safe-haven asset, influencing market sentiment and driving prices higher. The projections by Goldman Sachs for gold prices to reach $4,500 per ounce by the end of 2025 underscore the potential for further appreciation in the value of gold, driven by factors such as escalating tariff uncertainty, weaker economic growth, higher inflation, and persistent geopolitical risks. The analysis by UBS strategist Joni Teves highlights the growing importance of gold as a hedge against risk and uncertainty in the evolving global trade, economic, and geopolitical landscape. In conclusion, the soaring gold prices have had a multifaceted impact on the Indian jewellery market, influencing consumer behavior, investment strategies, and overall economic sentiment. The long-term outlook for gold remains uncertain, with a complex interplay of domestic and international factors shaping its future trajectory. Investors and consumers must carefully consider these factors when making decisions regarding gold investments and purchases.