Gold prices are heading to hit ₹1 lakh per 10 gram-mark given the growing concern on the US economy amid the ongoing trade tariff war.
Gold prices have already moved up sharply by ₹11,983 per 10 grams or 7 per cent in last one month to ₹91,115 from ₹85,320 logged on March 2.
Gold had a stellar start this year to deliver 19 per cent returns in March quarter, making it the second-best quarter after Q3 in 1986. In FY25, the precious metal has delivered a return of 40 per cent.
The rally in domestic gold prices was largely driven by firm trend in the global market where it has surged past $3,100 per ounce due to investors seeking safe-haven assets.
Tariff threats
Colin Shah, MD, Kama Jewelry, said there are high chances of retail gold hitting the ₹1-lakh-mark in 2025 with the anticipation of two rate cuts by Fed this year.
Moreover, he said being considered a safe-haven asset class, gold witnesses heightened demand and increased fund flows during the times of economic uncertainty.
Gold prices have been hitting multiple new highs from the start of this year fuelled by the recent uncertainty that has spread across the globe due to the tariff threats by the US President Donald Trump, he added.
The US tariff will significantly impact India’s gold jewelry industry, as the US is its largest export market.
As of FY24, the US accounted for 30 per cent of India’s total exports in this category. India’s tariffs on gold jewellery imports (20 per cent) are far higher than US import tariffs (5.5-7 per cent). While the US imposes no tariffs on cut and polished diamonds, India levies a 5 per cent import tariff.
Sriram Iyer, Senior Analyst at Reliance Securities, said it is possible for gold to reach ₹1 lakh per 10 grams in this year as it requires only about 10 per cent increase from the current trading level of ₹91,100 on the MCX.
The consistent buying of gold by central banks will also put upward pressure on prices, he added.
The weakening of the rupee has been one the major factors for domestic gold prices to move higher and any further rupee depreciation will support gold to hit the ₹1-lakh-mark. “We see more positives than negatives for the ₹1 lakh target this year,” said Iyer.
