Gold’s 32% Rally in FY25—Will Prices Touch ₹1 Lakh in FY26?

Gold prices have reached an all-time high, surging past $3,100 per ounce for the first time. This remarkable rally has been fueled by growing concerns over U.S. trade tariffs, geopolitical tensions, and increasing economic uncertainty.

Investors looking for a haven have turned to gold as a hedge against market volatility and inflation. Spot gold prices recently hit a record-breaking $3,106.50 per ounce, marking a significant milestone this year in the precious metal’s journey. Source: Economic Times

Gold Outshines Equities in FY25 with a 32% Surge in Domestic Markets

In the Indian market, the Financial Year 2024-25 emerged as a golden year for gold, significantly outperforming equities. As per MCX data, Indian spot gold prices surged 32% in FY25, while the Nifty 50 registered a modest gain of just over 5%.

On March 28, 2024, gold prices stood near ₹67,000 per 10 grams, rising sharply to approximately ₹88,700 within a year. In the derivatives market, MCX Gold futures settled marginally higher on March 28, closing 0.05% at ₹88,850 per 10 grams. Source: LiveMint

Can Gold Prices Reach ₹1 Lakh in FY26? 

According to market experts, gold’s outlook for FY26 remains bullish, supported by geopolitical uncertainty, central bank buying, and potential US Federal Reserve rate cuts. Emerging market central banks are likely to continue accumulating gold, which could push prices higher. If interest rates decline, a weaker dollar could further drive gold demand, possibly taking it to $3,200. Source: LiveMint

Experts believe gold could breach the ₹1 lakh mark if major global events unfold, such as:

• A deeper trade war – A prolonged trade war between major economies, such as the U.S. and China, could disrupt global supply chains, weaken currencies, and drive investors toward gold as a hedge against economic instability.
• Escalations in the Middle East or Russia-Ukraine conflict – Rising geopolitical tensions could trigger market volatility, energy price surges, and inflationary pressures, leading investors to seek safe-haven assets like gold, pushing prices toward the ₹1 lakh mark.
• Signs of stagflation in the US economy – If the U.S. experiences slow economic growth alongside high inflation, investors may lose confidence in equities and the dollar, increasing gold’s appeal as a stable store of value amid economic uncertainty.

Realistic Projections

Per market analysts, domestic gold prices in India could reach around ₹95,000 per 10 grams by the end of FY26. While long-term fundamentals remain strong, additional catalysts like severe currency depreciation or geopolitical shocks would be needed for gold to surpass ₹1 lakh per 10 grams. Source: LiveMint

5 Reasons Why Gold Prices Are Rising?

Gold has always been considered a safe-haven asset, especially during financial uncertainty. Several key factors are driving this rapid surge in gold prices:

1. U.S. Tariff Concerns: Policies introduced by  U.S. President Donald Trump, including a proposed 25% tariff on imported cars and additional tariffs on Chinese imports, have fueled market instability. These uncertainties have pushed investors toward gold as a protective measure.
2. Geopolitical Tensions: Ongoing conflicts and diplomatic tensions worldwide, especially involving major economies, have led investors to seek the stability of gold.
3. Inflation and Economic Worries: With inflation rates rising, the value of paper currency is diminishing, making gold an attractive alternative.
4. Strong Central Bank Demand: Many central banks, including those in China and India, are increasing their gold reserves, further boosting demand.
5. Exchange-Traded Fund (ETF) Inflows: A rise in investments into gold-backed ETFs has contributed to the soaring prices.

Source: Economic Times

A Year of Record-Breaking Highs

Gold prices have been consistently upward throughout the year, gaining more than 18% so far. Earlier this month, gold broke the psychological $3,000 per ounce barrier for the first time, reflecting a growing sense of economic instability among investors. Analysts suggest that this bullish trend will continue as global economic uncertainty persists.

Banks Adjust Their Gold Price Forecasts

Given the extraordinary rally, several major financial institutions have revised their gold price forecasts upward:

• Goldman Sachs predicts gold will reach $3,300 per ounce by year-end, increasing from their earlier estimate of $3,100.
• Bank of America (BofA) has adjusted its expectations, forecasting gold to trade at $3,063 per ounce in 2025 and $3,350 per ounce in 2026, up from previous estimates of $2,750 and $2,625, respectively.
• UBS and other investment firms have also raised their gold price targets, anticipating continued bullish momentum. Source: Economic Times

Challenges: Slowing Demand and Market Competition

Despite strong fundamentals, most bullish factors are already factored into current gold prices. Gold may consolidate at higher levels without fresh triggers due to demand fatigue and profit booking. A stock market rebound and a stronger US dollar could pose significant challenges to further price gains.

While short-term corrections are possible, gold’s long-term fundamentals suggest continued investor interest in FY26. The yellow metal is expected to remain a preferred safe-haven asset as uncertainty persists.

What’s Next for Gold Prices?

Market experts believe that gold prices will likely continue their upward climb unless geopolitical risks subside and economic uncertainty stabilizes. Factors such as future U.S. trade policies, global inflation trends, and central bank decisions will be crucial in determining the metal’s future trajectory.

Experts believe that tariff disputes will keep pushing gold prices upward until the ongoing trade war is resolved. Meanwhile, strong central bank demand and rising ETF inflows will further fuel this rally.

Final Thoughts

Gold’s rise past $3,100 per ounce shows its strong appeal as a safe-haven asset. With economic uncertainty, inflation, and global tensions, investors continue to rely on it. While prices may stabilize or climb further, gold remains highly valued. As analysts raise their forecasts, it’s clear that gold’s rally is far from over.

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