Gold prices soared to fresh high on Monday as the dollar index in the global markets plunged by 1.13 per cent to a three-year low of 98.10. The dollar index gauges the greenback’s strength against a basket of six currencies.
Since gold is a dollar-denominated metal, it becomes cheaper for institutional buyers and hedgers to buy haven gold in other currencies. Gold prices are inversely proportional to the dollar index movement.
Gold prices in India were near ₹ 1 lakh for 10 gm, including 3 per cent Goods and Service Tax , on the back of global developments. Pure gold prices gained two per cent or ₹1,760 per 10 grams on Monday at ₹96,670 against ₹94,910 on Thursday, according to the Indian Bullion Jewellers Association of India.
With the addition of three per cent GST, domestic prices inched up to ₹99,570 per 10 grams in Mumbai.
In the past month, gold prices have surged 13 per cent or by ₹8,164 per 10 grams to ₹96,670 on Monday from ₹88,506 registered on March 20 on the back of global economic uncertainty unleashed by the US trade tariff across the world.
Demand subdued
Ajay Kumar, Director, Kedia Commodities, said gold demand in India remains subdued as record-high prices discourage jewellery purchases, despite strong interest from investors in digital gold and exchange traded funds (ETFs).
“Dealers offered discounts of up to $74 per ounce over domestic prices, sharply higher than the $33 discount a week earlier,” he said.
Domestic prices have mirrored the gains in the international market as Comex spot gold hit a record high of $3,396 per ounce, while US gold futures rose to $3,403 per ounce, marking an increase of 2 per cent each.
Comex gold futures surged to $3,407 per ounce, marking a staggering 60 per cent gain since March 2024. The rally was fuelled by a sharp fall in dollar, intensifying geopolitical risks and policy uncertainty from Washington.
This apart, the intensifying trade war between the US and China has led to the imposition of new tariffs, increasing market volatility and driving investors towards safe-haven assets like gold.
Renisha Chainani, Head – Research, Augmont, said concerns over global economic growth as a result of the escalating Sino-US trade war are driving the gold prices, with a weaker dollar adding to the momentum.
Fundamentally, markets are pricing in increased geopolitical risks, fuelled by US trade tensions and stagflation concerns, while persistent central bank demand adds to price pressures, she said.
The dollar has been facing sustained pressure, with the Dollar Index down over 9 per cent year-to-date, reflecting the growing expectations of the Federal Reserve may eventually be forced to pivot.
Published on April 21, 2025
