Gold prices in Chennai surged to new all-time highs on Friday, just a day before Dhanteras, as festive demand combined with a global rally to push rates sharply higher. India, the world’s second-largest gold consumer after China, relies heavily on imports to meet domestic demand, with recycled gold contributing only a small fraction of total supply. As gold is traded globally in US dollars, fluctuations in the rupee-dollar exchange rate directly affect local market prices.
In Chennai, 22-karat gold was priced at Rs 12,200 per gram, while 24-karat gold stood at Rs 13,309 per gram. Jewellers in the city reported brisk demand from buyers looking to make pre-Dhanteras purchases despite the elevated prices. Local traders said the combination of festive sentiment and expectations of further price gains fuelled buying interest.
The Indian market generally sees higher domestic rates than global benchmarks due to import duties, Goods and Services Tax (GST), and other state-level levies. These factors make gold jewellery and bullion more expensive for Indian consumers, particularly during festive seasons when buying interest traditionally peaks.
Global Rally Driven by Safe-Haven Demand
Gold prices worldwide have gained over 50 per cent in 2025, crossing the $4,000 per ounce mark and notching up more than 35 record highs this year. Analysts attribute this sharp rally to global economic uncertainty, rising geopolitical tensions, and expectations that the US Federal Reserve will cut interest rates later this year.
According to Motilal Oswal Financial Services Ltd (MOFSL), the yellow metal could extend its rally towards $4,500 per ounce in international markets, supported by continued central bank purchases and strong Asian demand. “Gold’s stellar rally reflects a confluence of macro shifts, from fiscal uncertainty and a softer dollar to strategic diversification by central banks. Asia is emerging as the epicentre of this new monetary alignment,” said Manav Modi, Analyst, Commodities & Currencies, MOFSL.
In India, gold reached Rs 1.20 lakh per 10 grams last week and could move towards Rs 1.35 lakh in the long term, assuming a USD-INR rate of 89. The rally has been reinforced by a weak dollar index below 100 and China’s increasing role as a major gold accumulator.
Central banks worldwide purchased nearly 600 tonnes of gold in the first nine months of 2025, while global gold exchange-traded funds recorded inflows of 450 tonnes, the strongest since 2020. MOFSL said that despite record-high prices, India’s gold demand remains resilient due to cultural preferences and the festive season boost.
Silver, meanwhile, has outperformed gold in 2025, rising over 60 per cent so far and is expected to reach Rs 2.3 lakh per kilogram domestically, driven by industrial demand for solar panels, electric vehicles, and AI hardware. As Dhanteras approaches, jewellers in Chennai expect gold demand to remain robust despite high prices.
