Just days before the end of the year, gold stunned markets with a sharp and unexpected rally. In the futures market, 24-carat gold touched an all-time high of Rs 1.40 lakh per 10 grams, prompting fresh debate among investors over whether prices will rise further in the new year or stabilise after the surge. The late-year spike has been driven by global uncertainty and expectations of easier monetary policy, reinforcing gold’s status as a preferred safe-haven asset amid volatile financial conditions.
Global Tensions Drive Safe-Haven Demand
The primary driver behind the surge is heightened geopolitical risk. The Russia-Ukraine war continues with no clear resolution, while concerns over potential disruptions to crude oil supplies from Venezuela have added to global anxiety. Reports of US military action against ISIS-linked groups in Africa have further unsettled markets. In such an environment, investors are pulling money out of riskier assets like equities and shifting towards traditional safe havens such as gold and silver, pushing prices higher.
Rate-Cut Expectations Fuel Buying
Another key factor is the outlook for interest rates. Markets expect the US central bank to cut rates at least twice next year. Lower interest rates reduce the appeal of fixed deposits, bonds and savings instruments, prompting investors to look for alternatives that can preserve value. This has led to sustained inflows into gold ETFs, while central banks across the world have also stepped up gold purchases, limiting any meaningful downside in prices.
Is Gold Too Expensive To Buy Now?
For those planning to buy gold for weddings or other major occasions, prices are currently elevated. However, analysts say a significant correction appears unlikely if geopolitical tensions persist. Gold prices have already risen more than 70 per cent this year, underlining its shift from being seen largely as a luxury item to becoming a core component of investment portfolios.
Could Gold Hit Rs 1.60 Lakh?
A survey by Goldman Sachs suggests gold prices could rise by around 36 per cent next year, potentially reaching $5,000 an ounce. At current exchange rates, this would translate to roughly Rs 1,58,213 per 10 grams.Meanwhile, JPMorgan has projected that gold could touch $5,000 by the end of 2026, implying a domestic price of about Rs 1,56,426 per 10 grams. These estimates do not include the additional 3 per cent GST and stamp duty applicable in India.
