Gold Price Surge: The calendar year 2025 has been a stellar one for gold. The yellow metal has managed to breach the psychological mark of $3,000 per ounce. A report by the World Gold Council (WGC) states that so far in 2025, gold has managed to outperform other asset classes.
The report stated that gold is India’s top performing asset having gained 13 per cent on a year-to-date basis as of March 13, 2025. The gains made by the yellow metal are in sharp contrast compared to the negative returns made by Indian equity indices. While fixed-income assets such as Bank fixed deposits, Government bonds, Corporate Bonds and Treasury Bills have gained up to 7 per cent, they have also underperformed compared to the yellow metal.
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Despite the downtrend seen in equities, the demand for gold ETFs continued to remain steady in February as per the report. Notably broadening investor interest contributed significantly to the demand for gold ETFs.
Why Is the Gold Price Rising
World Gold Council said in its report that the surge witnessed by the yellow metal has been driven by major factors such as positive economic trends and sustained investment demand.
As per the WGC, concerns regarding inflation, geopolitical and economic uncertainty, a weaker US Dollar and the lowering of interest rates across economies have fueled the demand for the safe-haven asset, which in turn has positively influenced the price of gold. The gains can also be attributed to weakness in the rupee when compared to the US Dollar and the 1.3 per cent year-to-date depreciation seen in the rupee.
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Key Buying And Selling Trends In Gold
The price rise seen in gold has also impacted the demand for gold jewellery. The report added that the purchases of jewellery have been dominated by weddings. Apart from the rising price of gold factors such as statutory payments and tax-saving investments have also negatively impacted discretionary spending on gold jewellery across both urban and rural areas.
Even as the demand for jewellery has fallen the investment demand for gold bars and gold coins has remained healthy, driven by expectations of sustained bullish sentiment regarding the price of gold.
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On the selling side, the price rise has prompted sales of old gold jewellery with retailers reporting a significant uptick in such sales. Additionally loans against gold jewellery have also increased.
On the institutional front, the Reserve Bank of India held off gold purchases in February, marking its second pause in three months, according to the report.
Despite the pause, the bank has increased its gold holdings consistently since early 2024, purchasing an average of 6.3 tonnes in 12 of the last 14 months.
On the international trade front, gold imports declined to their lowest level since March 24 in February marking the third consecutive month of decline. Notably, such a trend indicates a weak demand environment amid surging prices. As per the Ministry of Commerce and Industry, CMIE, the gold import bill for February amounted to $2.3 billion a 14 per cent month-on-month and 63 per cent year-on-year decline.
