Gold has crossed ₹82,000 per 10 grams for the first time. On January 31, 2025, the price of 24-carat gold reached ₹82,165 per 10 grams. Just a month ago, on December 31, 2024, it was ₹76,162 per 10 grams, marking an increase of ₹6,003 in just 31 days. So, what’s driving this surge in gold prices? And with the upcoming budget, could gold get even more expensive? Here’s a detailed analysis of the situation.
Table of Contents
Gold Prices : Will Gold Become More Expensive in the 2025 Budget?
Looking back at the 2024 budget, Finance Minister Nirmala Sitharaman reduced the customs duty on gold from 15% to 6%, leading to an immediate drop of around ₹4,000 per 10 grams. This reduction sparked a surge in gold imports. According to The Economic Times, in the 2025 budget, the finance minister could reverse this cut and increase the customs duty on both gold and silver. Here’s why:
Gold Prices : Revenue Generation Needs
According to the Controller General of Defence Accounts (CGDA), the government faced a fiscal deficit of around ₹8.5 lakh crore between April and November 2024. To manage this deficit and boost government revenue, increasing customs duties on gold could help.
Gold Prices : Controlling Domestic Demand
India’s domestic demand for gold is extremely high, and this could exacerbate the country’s current account deficit (CAD). By raising customs duties, the government may attempt to control gold imports and curb excessive consumption.
Experts suggest that if the customs duty on gold increases from 6% to 12%, prices could rise by ₹4,000-₹5,000 per 10 grams.
In 2024, India’s gold consumption was approximately 850 metric tons, up from 747 metric tons in 2023.
What’s Driving the Surge in Gold Prices?
There are four major factors behind the recent rise in gold prices:
Gold Prices : US Economic Policies Under Trump
The economic turmoil following Donald Trump’s presidency, marked by tariffs on countries like Mexico and Canada, spurred gold demand. Investors, wary of stock market fluctuations and currency instability, flocked to gold, driving up prices.
Gold Prices : Weakening Indian Rupee
In 2021, the value of 1 US dollar was ₹75.41, but by January 30, 2025, it had risen to ₹86.58. A weaker rupee makes gold imports more expensive, directly impacting domestic gold prices.
Gold Prices : Increased Investment in Gold ETFs
With stock markets experiencing volatility, investors have turned to Gold Exchange-Traded Funds (ETFs) as a safer investment option. This has led to an increased demand for gold, thereby pushing up prices.
Gold Prices : Inflation Hedge
Gold is considered a hedge against inflation. When inflation rises, people invest in gold because its value tends to remain stable, unlike the purchasing power of currency. This surge in inflation-driven demand has led to higher gold prices.
Gold Prices : Could Gold Reach ₹1 Lakh per 10 Grams in the Next 30 Days?
Business expert Ajay Kedia states that it’s unlikely gold will hit ₹1 lakh per 10 grams in the next 30 days. While there may be some fluctuations, the current demand, influenced by factors like falling interest rates, inflation, and geopolitical tensions, suggests that gold prices will continue to rise. However, achieving ₹1 lakh per 10 grams in the near future remains a challenge.
The highest gold price expected by December 2025 is around ₹85,000-₹90,000 per 10 grams. But if the factors influencing gold prices continue to strengthen, it could potentially reach ₹1 lakh by 2026.
Gold Prices : Are Gold Price Trends the Same Globally?
Gold prices are determined on an international level, not by individual countries. The London Bullion Market Association (LBMA) regulates the prices of 24-carat gold. After October 30, 2024, gold prices in the LBMA have been on the rise. As of January 2025, the price of gold per ounce was $2,644, increasing to $2,753 by January 30, 2025.
Gold Prices : What Can We Expect in Gold Prices in 2025?
According to Ajay Kedia, gold prices are likely to rise consistently throughout 2025. By June 2025, 24-carat gold prices in India could reach ₹85,000-₹90,000 per 10 grams, while globally, gold prices might touch $3,000 per ounce. There are three main reasons for this:
Central Bank Purchases
Central banks worldwide have been increasing their gold reserves, especially since the Russia-Ukraine war. These purchases have surged to nearly three times pre-2022 levels and are expected to continue, pushing up gold prices.
Gold Prices : Geopolitical Tensions
The ongoing Russia-Ukraine war, along with potential conflicts in places like Myanmar and China, are creating uncertainty in global markets. This geopolitical tension has traditionally been a driver of increased gold demand.
Potential Federal Reserve Rate Cuts
The US Federal Reserve has not yet cut interest rates, but if it does, gold prices could rise significantly. Lower interest rates reduce the appeal of other investments, making gold more attractive to investors.
Conclusion
Gold prices in India have already seen significant increases, and with the upcoming budget and global economic factors in play, prices could rise further. While a ₹1 lakh per 10 grams gold price isn’t likely in the immediate future, continued demand for gold, combined with external factors like inflation and geopolitical instability, suggests that gold could see further price hikes over the next few years. Stay informed and consider these factors before making any investment decisions in gold.
