Gold Prices Hover Near All-Time High – Here’s Why The Yellow Metal Is Rising

Gold prices have been on a strong uptrend in 2025 so far. On Friday, February 21, the precious metal slipped a little after hitting an all-time high of Rs 86,592 per 10 grams in India. However, it is still hovering around its all-time high.

On February 21, Spot Gold on MCX quoted at Rs 85,695 per 10 grams, as of 5:30 PM. Gold April Futures traded at Rs 85,695 per 10 grams around the same time, down by Rs 329, or 0.38 per cent from the previous close.

Spot gold in the US slipped 0.2 per cent to $2,934.02 per ounce as of the same time, after hitting a record high of $2,954.83 per ounce on February 20.

As per Good Returns data, gold prices fell today, with 24K gold dropping by Rs 290 to Rs 87,750 for 10 grams. 22K gold dropped by Rs 450 to Rs 80,250, and 18K gold fell by Rs 370 to Rs 65,660 per 10 grams.

In 2025 so far, gold prices have rallied nearly 12 per cent, after yielding a positive return of over 21 per cent in 2024, as per the World Gold Council. Meanwhile, India’s equity market’s headline indices Sensex and Nifty have delivered just 3.7 per cent and 3.36 per cent, respectively, over the past one year.

Why Gold Prices Are Rising?

Gold has emerged as the top-performing asset class in India, delivering one of its best performances in this decade.

Vinod Nair, Head of Research, Geojit Financial Services, explains, the gold prices have been rising due to a combination of factors, including global uncertainties, geopolitical tensions in the Middle East, and strong demand from central banks, particularly in Asia.

“Economic instability, inflationary pressures, and currency fluctuations have further contributed to this upward trajectory,” he added.

In his Greed & Fear report dated February 18, Christopher Wood, Global Head of Equity Strategy at Jefferies, pointed out that central bank gold buying has increased significantly in the last quarter of 2024. The World Gold Council’s latest data shows central banks bought 333 tonnes of gold in 4Q24, up from 194 tonnes in 3Q24.

In total, they purchased 1,045 tonnes of gold in 2024, following similar purchases of 1,051 tonnes in 2023 and a record 1,080 tonnes in 2022. Since the US seized Russian foreign exchange reserves in February 2022 due to the Ukraine conflict, central banks have accumulated 3,093 tonnes of gold, Wood said.

“For related reasons, gold has been able to keep rallying despite a strong US dollar,” he added.

Wood also mentioned that last Friday, China launched a pilot program allowing ten insurance companies to invest up to 1% of their assets in gold bullion. This could potentially lead to around Rmb200bn (US$27bn) in buying power. Additionally, the People's Bank of China (PBOC) has resumed its gold purchases in recent months, buying 20.2 tonnes over the past three months, Wood said.

Gold Rate Outlook: What Next?

Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said, “Gold traded weak and remained volatile within a range (on February 21), with Comex gold fluctuating between $2,920 and $2,935. In MCX, gold moved between Rs 85,900 and Rs 85,400, with rupee weakness supporting prices above Rs 85,350 despite a flat dollar index.”

According to Trivedi, market participants will be closely watching upcoming manufacturing, services, and existing home sales data, which could add to gold’s volatility in the next session.