Price Surge of 24-Carat Gold in India

For the first time, the price of 24-carat gold has reached Rs 1 lakh per 10 grams in India, marking a significant milestone.

Key Global Factors Driving the Price Surge:

1. Geopolitical Tensions: Rising global conflicts and economic uncertainties have led many investors to view gold as a safe-haven asset.
2. US Federal Reserve Rate Cuts: As interest rates decline, the appeal of gold increases, since it offers no yield, making it more attractive when the opportunity cost of holding cash or bonds falls.
3. Weakening of the US Dollar: A weaker dollar makes gold cheaper for buyers in other currencies, leading to a boost in demand.
4. Central Bank Accumulation: Central banks, especially in Asia, have been increasing gold purchases to reduce reliance on the US dollar and diversify their reserves.

India’s Gold Market:

1. Consumer Rank: India is the second-largest consumer of gold in the world, just after China.
   • In 2024, India's gold demand reached 802.8 tonnes.
2. Import Dependency: Approximately 85% of India’s gold is imported, making domestic prices highly sensitive to global market trends.

Reasons for High Gold Demand in India:

1. Financial Security: Gold is seen as a reliable store of value, particularly in times of inflation or market instability.
2. Cultural and Religious Significance: Gold holds a special place in Indian culture and is an essential part of festivals like Diwali, Dhanteras, and Akshaya Tritiya.
3. Wedding Season Demand: The wedding season drives significant gold purchases, with jewelry being a traditional and prestigious gift for brides.
4. Rural Accessibility: In rural areas, where many people lack access to banks or stock markets, gold serves as a trusted and liquid asset for saving, investing, or even borrowing.

Gold Reserves in India:

1. Gold Ore: Bihar holds the largest gold ore resources (43%), followed by Rajasthan (24.92%) and Karnataka (20%).
2. Metal Content: Karnataka has the highest metal content of gold, followed by Rajasthan, Andhra Pradesh, and Bihar.

Gold Reserves Globally:

1. Major Holders of Gold Reserves: The United States holds the largest reserves, followed by Germany and Italy.
2. Major Exporters: Germany is the largest exporter of gold, followed by the European Union and Switzerland (World Integrated Trade Solution, 2023).

 

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