Gold prices are likely to hit Rs 25,000 per 10 grams by this Diwali due to rise in demand for the yellow metal as a better investment alternative, analysts said.
The European Union's economic crisis and sluggish market recovery in US is leading to increased investments in silver also, which could see the prices of the metal touching Rs 65,000 per kg by Diwali season in October, they said.
Gold prices are currently ruling around Rs 22,450 per 10 gram, while silver is selling at around Rs 54,700 per kg.
"The recovery in US markets is not on expected grounds as the country's unemployment rate was higher in June compared to May this year adding to the uncertainty over the pace of the economic recovery," Emkay Global Financial Services, a commodity brokerage firm said.
According to Emkay Commodities Head Atul Shah, the European Union debt crisis involving Portugal, Ireland and Spain has also shaken investors confidence who are increasingly using gold and silver to hedge against losses.
The Libyan crisis that is far from over is also putting pressure on crude prices leading to volatility in the oil markets, Shah pointed out.
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"With uncertainty in world economy and no clear solution in the coming months, the gold prices could climb to Rs 25,000 per 10 grams and silver can touch Rs 65,000 per kg by Diwali," Shah said.
According to WellIndia, another commodity brokerage firm, it is expected that gold and silver may trade upside in the next few weeks because of uncertainty in global economy and safe heaven demand by investors.
According to World Gold Council data, investment demand in Gold from US continues growing. China and India accounted for 51 per cent of the world gold consumer demand and this year it can increase up to 58 per cent, WellIndia said.
"Demand for silver is increasing day by day in China and India. Industrial and jewellery demand is not only increasing but also investors are using gold and silver hedge against inflation," it added.