India’s gold market kicked off the new fiscal year 2025-26 on a robust note, with prices hitting an all-time high of ₹6,850 per gram in early Monday trading. The surge of 1.8% marks a continuation of the metal’s upward trajectory, fueled by a confluence of international price gains, domestic demand resilience, and geopolitical uncertainties.
Dual Catalysts: Global Trends and Local Demand
Analysts attribute the rally to mounting global tensions and central bank buying sprees. The US-China trade war escalated further over the weekend after President Donald Trump announced reciprocal tariffs on “all trading partners,” exacerbating safe-haven flows into gold. Concurrently, India’s wedding season—traditionally a peak period for gold purchases—is driving renewed physical demand, with imports rising 15% month-over-month to 75 tons in March.
Currency Dynamics Amplify Gains
The depreciating Indian rupee (INR) against the US dollar added upward pressure, as a weaker domestic currency increases import costs. Traders noted that the INR-USD exchange rate, currently hovering near 84.50, remains a critical variable for future price movements. India’s central bank, which has added 786 tons of gold to its reserves over the past year, continues to diversify holdings amid economic volatility.
Cautious Optimism Amid Macro Risks
While short-term sentiment remains bullish, market participants warned of potential headwinds. “The Federal Reserve’s pivot toward dovish policy could weaken the dollar, supporting gold,” said a New Delhi-based bullion trader. “However, any signs of cooling inflation or geopolitical de-escalation might temper gains.” Forecasts suggest India’s gold consumption could rebound to 900 tons in FY2025-26, an 8% increase from the previous year, driven by jewelry demand and investment inflows.
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