Gold prices are glittering once more, touching a fresh record high of nearly $4,000 an ounce in 2025. The surge comes as political uncertainty in France and a U.S. government shutdown trigger fears across global financial markets. Investors, seeking safety amid turmoil, are once again turning to the yellow metal.

Contents

Why Gold Prices Are Soaring?Rupee Depreciation Boosts Indian Returns

This rally echoes past bull runs seen during major global crises such as the 2008 financial meltdown and the 2020 pandemic, both of which drove gold to record highs. The ongoing rise is being powered by geopolitical tensions, central bank purchases, and changing monetary policies across major economies.

Why Gold Prices Are Soaring?

According to the World Gold Council, central banks worldwide have almost doubled their gold holdings over the last decade, reinforcing faith in gold as a global reserve asset. India, too, has steadily added to its reserves amid a volatile global landscape.

Gold has already risen over 60% this year, reflecting strong investor confidence. In comparison, from January 2008 to August 2011, gold prices had jumped by 100%, while between January and August 2020, they grew by about 53%.

One of the biggest drivers behind the current rally is the U.S. Federal Reserve’s 25-basis-point rate cut in September 2025, with expectations of another cut if the labor market weakens. Lower interest rates generally weaken the U.S. dollar, making gold more attractive as a safe-haven asset.

Adding fuel to the rally are global tensions—from the Russia-Ukraine conflict to Middle East unrest and sluggish global growth—all of which are pushing investors toward gold.

Also Read: Tata Steel faces ₹2,411 crore demand over Sukinda mine shortfall

Rupee Depreciation Boosts Indian Returns

For Indian investors, the rally is even more rewarding. With the rupee depreciating against the U.S. dollar, the price of imported gold rises, amplifying local returns. Over the past 30 years, gold has given about 11% annualized returns in rupee terms, compared to 7.6% in dollar terms.

This makes gold a valuable hedge not only against inflation and uncertainty but also against currency depreciation.

Investment Demand Rising Despite High Prices

While jewellery demand may slow down due to high prices, investment demand through Gold ETFs and digital gold is increasing steadily. Investors are viewing gold as an essential portfolio diversifier and a reliable hedge in uncertain markets.

According to Tata Mutual Fund’s Gold and Silver Outlook Report (October 2025), gold prices may consolidate between $3,500 and $4,000 per ounce in the short term as markets adjust to changing U.S. trade policies and growth concerns.

“Investors may remain invested and look for accumulation on any decline in the prices triggered by short-term cyclical factors,” the report noted.

The report also suggests a balanced allocation between gold and silver (50:50), considering both metals are well-positioned as long-term strategic assets.

Gold as a Long-Term Strategic Asset

Experts believe that the current environment remains favorable for gold. The metal continues to serve as an effective hedge against inflation, geopolitical risks, and currency volatility.

Gold’s rally is not just a festive-season spike; it reflects deeper shifts in global monetary policy and investor sentiment. For Indian investors, it reinforces gold’s role as a symbol of stability rather than speculation.

Whether through Gold ETFs, digital gold platforms, or Sovereign Gold Bonds, maintaining a small but steady allocation to gold can serve as a strong shield against financial risks in volatile times.