Gold Price Hits Record High: What’s Fuelling the Surge?

By Team Gullak

Feb 5, 2025

3 min read

Gold prices soared to a record ₹87,529 on February 5, 2025, continuing its strong momentum from 2024, where it delivered ~29% returns. In just the 1st 6 weeks of 2025, prices have increased by ₹8529/10 gms. Let’s break down what’s fuelling this rally and what to expect next.

Why is the Gold price Rising?

Global Factors for Gold price increase

Trade Tensions: The U.S. imposed a 10% import duty on Chinese goods, prompting China to retaliate with 15% tariffs on coal and LNG. Trump’s reluctance to negotiate has heightened market uncertainty, pushing investors toward gold.

Weak U.S. Job Data: Job openings in December fell to 7.6 million (vs. an expected 8 million), signaling a slowdown. The dollar index dropped from 109.80 to ~107.90, further boosting gold.

Domestic Factors for Gold price increase

Stock Market Decline: FII sell-offs have weakened Indian markets, prompting investors to seek stability in gold.

Lower Tariffs on Jewellery: The 2025 Budget reduced gold jewellery tariffs from 25% to 20%, driving higher demand.

What’s Next for Gold in 2025?

Rising economic uncertainty, inflation, and a weaker rupee are supporting gold price increase. Central bank purchases, geopolitical risks, and market volatility further fuel demand.

With U.S.-China tensions persisting and potential EU tariffs on the horizon, gold prices may increase even higher as investors seek safety.