Why is the gold price rising so fast? know the reason behind this
Why is the gold price rising so fast? Gold prices are expected to rise to Rs 85,000 per ten grams or 100 grams by 2025 due to central bank stimulus, continued geopolitical instability, and trade war concerns. Analysts believe that gold’s safe-haven status will attract more investment during times of economic uncertainty.
Gold prices witnessed a major rally in 2024, reaching a high of $2,790 as the US Federal Reserve cut rates by a hundred basis points. Internationally, base metal prices closed in positive territory after China announced a slew of stimulus packages to revive economic growth. In addition, currency weakness in major economies supported prices. Domestically, a weaker rupee helped push prices higher.ICICI Bank analysts said that gold prices are likely to continue to rise on safe-haven demand amid rising geopolitical tensions and concerns over a potential trade war that could dent economic growth. In addition, major central banks are likely to continue to ease monetary policy as inflation approaches central bank targets. Geopolitical tensions and uncertainty in the Middle East and Eastern Europe are also weighing on gold prices. you can also check Which gold is better for jewellery?
In addition, central banks are likely to continue their purchases and diversify their reserves. The strength of the dollar and the rise in US Treasury yields could put some pressure on gold prices. Trump’s proposed policy is inflationary in nature, which will prevent the Fed from cutting interest rates. The report said that spot gold is likely to increase from $2,900 to $3,300 in the coming months. Central banks around the world bought 186 tons of gold in the third quarter of 3SW24, which is less than the same quarter last year. Moreover, central banks have bought 694 tons of gold so far this year, which is the same as the same period in 2022.
The dollar and US Treasury yields are rising. We believe that the demand for new investments has increased in 2025 as investors buy gold as a store of value amid trade war concerns. The momentum in the dollar index has already started to build and is likely to continue. The ICICI director also said that Trump’s trade and immigration policies could lead to higher inflation in the US, which could reduce the Fed’s ability to cut interest rates. Moreover, uncertainty about growth due to the start of the trade war could hurt market sentiment, which is supporting the dollar.
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