Gold prices are projected to reach unprecedented levels by early 2025, driven by multiple global factors. The precious metal is set for a bullish surge, primarily fueled by aggressive central bank purchases, potential U.S. Federal Reserve interest rate cuts, and ongoing geopolitical tensions. These factors are combining to make gold a more attractive investment, pushing prices higher than ever before.
Central Bank Purchases Driving Demand
A major force behind the expected rise in gold prices is the aggressive gold-buying behavior of global central banks. This trend, which gained momentum after the onset of the Russia-Ukraine conflict, has expanded as countries seek to diversify away from U.S. dollar-denominated assets. Central banks, particularly from countries like China, Turkey, Brazil, Singapore, and India, are turning to gold to shield their reserves from economic sanctions and currency fluctuations.
China, for instance, has been steadily increasing its gold holdings, adding to its reserves for ten consecutive months in 2023. This buying spree has continued into 2024, with 290 tonnes of gold purchased in the first quarter alone—one of the strongest quarterly performances since the start of this trend. Other nations have followed suit, recognizing the strategic value of gold as a hedge against political and economic uncertainties.
This wave of gold buying is expected to persist into 2025, further driving up demand and pushing prices toward new highs. The move away from reliance on the U.S. dollar and the need for a safe-haven asset in a turbulent global economy are key motivations behind this sustained demand.
Federal Reserve’s Interest Rate Cuts
Another critical factor supporting the rise in gold prices is the anticipated shift in U.S. monetary policy. The U.S. Federal Reserve is expected to transition from its aggressive interest rate hikes to potential cuts, a scenario that historically boosts gold’s appeal. When interest rates are high, gold, which does not generate yield, tends to be less attractive to investors. However, as rates fall, gold becomes more competitive compared to yield-bearing assets.
This change in monetary policy is likely to draw both retail and institutional investors back into the gold market. The reduction in interest rates could reduce the attractiveness of other investments, making gold a preferred store of value for many investors seeking stability in uncertain times.
Geopolitical Tensions Supporting Gold’s Role as a Hedge
Geopolitical risks also play a significant role in pushing gold prices higher. The current fragile global landscape, marked by trade wars, sanctions, and escalating tensions between major powers, enhances gold’s appeal as a safe-haven asset. In addition, concerns over issues such as the independence of the U.S. Federal Reserve, global debt sustainability, and the potential for further financial sanctions are creating a fertile environment for gold price increases.
Countries seeking to protect their economic interests amid rising geopolitical uncertainties are turning to gold to mitigate risks. Any escalation in global tensions or sanctions could lead to an even sharper rise in gold prices, with some experts predicting the metal could hit new record highs in the near future.
Indian Gold Prices Surge Amid Festive Demand
In India, gold prices have already reached new all-time highs ahead of the Diwali festivities. As of mid-October 2024, gold prices surged to Rs 77,641 per 10 grams on the Multi Commodity Exchange (MCX), reflecting strong domestic and global demand. This marks a significant increase in just over a week, as consumer demand intensifies during the festive season.
| Price of 22 Carat Gold | Price |
| 1 gm | Rs 7,240 |
| 8 gm | Rs 57,920 |
| 10 gm | Rs 72,400 |
| City | Gold Price (24 Carat) |
| Mumbai | Rs 7,240 |
| Delhi | Rs 7,255 |
| Chennai | Rs 7,240 |
| Bengaluru | Rs 7,240 |
| Kolkata | Rs 7,240 |
Experts expect further price increases, with festive demand and global uncertainties driving the momentum. Predictions indicate that gold could rise to ₹78,500 per 10 grams if supportive global trends continue. As central banks continue their aggressive buying and geopolitical tensions persist, investors are likely to view gold as a reliable asset, with the potential for prices to reach record levels well into 2025.
