Gold's Value Surges Amid Price Spike and Tariff Tensions

Gold demand fell by 15% in India in early 2025 due to soaring prices, yet its value surged by 22% as global prices hit record highs. International gold prices rose sharply amidst concerns over tariffs, while investment interest and cultural significance maintain robust market activity.

An unprecedented rise in gold prices has led to a 15% drop in India's gold demand by volume in the January-March 2025 quarter, according to the World Gold Council. The demand stood at 118.1 tonnes, down from 139 tonnes in the same period last year.

Despite the decline in sales volume, the overall value of demand saw a 22% increase in rupee terms, sparked by a 25% rise in global gold prices. This rally pushed prices to a record high of Rs 1 lakh per 10 grams. Sachin Jain from the World Gold Council emphasized the enduring appeal of gold as a safe-haven asset among Indian consumers.

International factors, including uncertainties from potential trade wars, have fueled gold's northward price trajectory. Data shows a 40% rise in international gold prices over the past year. The World Gold Council also reported a 7% year-on-year increase in investment demand, supported by interest in gold ETFs and other forms.

However, gold jewelry demand tumbled by 25% due to affordability issues, yet consumer sentiment remains buoyed by cultural and seasonal purchasing, such as during Akshaya Tritiya and the wedding season. An 8% rise in gold imports reflects retailer preparedness for ongoing festive demands despite ongoing tariff uncertainties.

Even as gold recycling fell by 32% with consumers holding their assets due to high prices, the cultural and investment aspects suggest a bright future for gold in India. The World Gold Council has estimated India's gold demand for 2025 to be between 700 and 800 tonnes.

(With inputs from agencies.)