Gold could touch Rs 90,000/10 grams in 2025: What should investors do?

Gold is set to maintain its status as a safe-haven asset, with projections suggesting prices could rise to Rs 85,000 per 10 grams and potentially even touch Rs 90,000 if geopolitical tensions and global economic uncertainties persist. Currently, gold is priced at approximately Rs 79,350 per 10 grams in the spot market and Rs 76,600 per 10 grams in futures trading on the Multi Commodity Exchange (MCX).

 

In 2024, gold demonstrated remarkable resilience, closing the year with a 23% increase in domestic markets. The yellow metal reached an all-time high of Rs 82,400 per 10 grams on October 30, driven by heightened demand due to ongoing geopolitical crises, notably the Russia-Ukraine conflict, and rising tensions in the Middle East.

 

Several key factors are propelling gold's upward trajectory. Central banks globally, including India, have been actively purchasing gold to diversify their reserves amid economic uncertainties. In 2024, net purchases exceeded 500 tonnes, highlighting a strategic shift towards precious metals. Additionally, a dovish monetary policy from major central banks is expected to support gold prices, despite potential fluctuations stemming from the U.S. Federal Reserve's cautious approach to interest rate cuts.

 

Market analysts suggest that if the geopolitical landscape remains tumultuous, gold's appeal will continue to grow. However, should tensions ease, and with a depreciating rupee potentially affecting local prices, the bullish trend could face challenges.

 

"The performance of gold and silver in 2024 has underscored their importance as strategic assets in a well-balanced investment portfolio. With expectations of moderating inflation, geopolitical risks, and shifts in monetary policy, both metals are poised to remain resilient in 2025. Investors should view gold and silver not merely as short-term speculative assets but as long-term wealth preservation tools and strategic hedges against uncertainty.

 

By maintaining a balanced asset allocation, leveraging systematic investment strategies, and staying informed about global and domestic trends, investors can navigate market volatility confidently while ensuring sustained growth and financial security," said Narinder Wadhwa, Managing Director & CEO SKI Capital.

 

Performance of Gold and Silver in CY2024: An Indian Perspective

 

• In 2024, gold and silver delivered one of their best performances in over a decade. Gold prices in India rose significantly, breaching the Rs 76,000 per 10 grams mark, reflecting an annual growth of over 26%. 
• This surge was primarily fueled by central bank purchases, geopolitical tensions, and expectations of accommodative monetary policies by global central banks, including the RBI.
•  Silver, on the other hand, outperformed gold in percentage terms, with prices witnessing a substantial rise of nearly 42%. 
• Starting the year at approximately Rs 70,000 per kilogram, silver crossed the psychological barrier of Rs 1 lakh per kilogram, driven by robust industrial demand, especially in solar energy and electric vehicle (EV) technologies, along with its historical appeal as a store of value.

 

The buoyancy in bullion markets was further supported by heavy retail demand during India’s festive and wedding seasons, as well as increasing geopolitical instability, which pushed investors towards precious metals as a safe-haven hedge.

 

Historical Performance of Gold and Silver: 

• Gold Performance (2014–2024): Gold has consistently delivered average annual returns of approximately 8%, with standout years during periods of global financial uncertainty and rising inflationary pressures. 
• In 2023, gold delivered an annual return of 13.1%, In 2024 Gold has performed exceptionally well giving returns of above 30%.
• Silver Performance (2014–2024): Silver, while more volatile than gold, has shown significant appreciation, particularly in years marked by increased industrial activity and heightened investor demand for precious metals. 
• 2024 has been exceptional for silver, with its prices crossing decade-long highs and reaffirming its dual role as both an investment asset and an industrial commodity.

 

Global Trends and Predictions

On the international front, gold futures have started strong, beginning the year around $2,062 per ounce and peaking at $2,790 per ounce by October, yielding a 28% return. However, potential volatility remains, particularly with the U.S. Federal Reserve expected to limit aggressive rate cuts in 2025, which may temper price gains.

 

Industry experts believe that while the first half of 2025 may present challenges, the latter part of the year could see a resurgence in demand as geopolitical tensions ease and consumer sentiment improves. The Indian gems and jewelry industry is poised for growth, with projections indicating it could reach $100 billion by 2025, driven by both domestic and international demand.

 

The outlook is bearish for gold in the first half of 2025, with the possibility of testing $2,455 (MCX: 73,000-73,500), according to Commtrendz Research co-founder and CEO Gnanasekar Thiagarajan. The rupee is expected to depreciate further, which could arrest the fall in local prices relative to international prices in the coming year.  What should investors do?  

"After this rally, gold is expected to remain rangebound in 2025. Silver, on the other hand, may witness momentum on the back of its usage in various industrial applications including electronics, solar panels for renewable energy, advanced healthcare and electric vehicles. Various supply-side challenges also led to higher prices of silver – a situation unlikely to improve soon. We may expect the silver prices to remain buoyant. A reversal in the DXY index may be positive for commodities. Hence a rally in metals may be expected if the DXY reverses," said Deepak Ramaraju, Senior Fund Manager, Shriram AMC. 

“Silver is down, but not out”, as it takes a breather before the next leg up, we remain positive over the medium to long term prospects. Support are near Rs 85,000- Rs 86,000; for targets towards Rs 1,11,111 and Rs 1,25,000 on domestic front & $38.55 and $43 on Comex. Buying on dips is recommended from a 12-15 month perspective," said  Manav Modi, commodity analyst at Motilal Oswal. 

 

For Gold: Motlilal maintains a positive bias and have revised its upward potential target towards Rs 81,000 on the domestic front. Over the next two years, Gold could be on track for the targets of Rs 86,000, hence “Buy on dips" is recommended.