Gold prices surged to an unprecedented high of $3,106 per ounce on Monday, as the approaching US reciprocal tariff deadline and global economic uncertainties drove investors to seek refuge in the safe-haven asset. The yellow metal has witnessed an impressive rise of over 18 percent this year, with retail investors playing a significant role in fueling the surge. This momentum has led major financial institutions, including Goldman Sachs, Bank of America, and UBS, to raise their gold price targets.
A recent report by BofA Global Research indicates that gold could potentially climb to $3,500 per ounce over the next 18 months if non-commercial purchases increase by 10 percent. The report also highlights the potential for central banks worldwide to bolster their gold holdings, projecting an increase from the current average of 10 percent to over 30 percent in an effort to optimize portfolio efficiency.
India’s gold market has mirrored the global trend, with the yellow metal emerging as one of the highest-performing asset classes in 2024. Gold delivered a remarkable 21 percent year-on-year return, underpinned by record inflows into gold exchange-traded funds (ETFs). Indian gold ETFs experienced net inflows of $1.37 billion in 2024, adding 15 metric tonnes to their total holdings, which reached 57.8 tonnes by the end of the year, according to Motilal Oswal Private Wealth.
The Reserve Bank of India (RBI) continued its gold accumulation strategy, adding 72.6 tonnes to its reserves in 2024, marking the seventh consecutive year it has been a net buyer of gold. This increase brought the RBI’s total gold reserves to 876 tonnes, with gold now accounting for 10.6 percent of the central bank’s foreign exchange reserves.
Despite the steep rise in prices, which has dampened jewellery demand, investment in physical gold such as bars and coins has remained robust. Experts attribute this trend to gold’s status as a long-term strategic asset. While gold has garnered significant attention as a safe-haven investment, analysts also suggest that silver, with its tactical advantages, offers opportunities for short-term allocations.
The persistent interest in gold underscores its enduring appeal amid global economic challenges, with both retail and institutional investors viewing it as a hedge against inflation and market volatility. As the economic landscape continues to evolve, gold remains a central element in investment strategies, offering stability and long-term value.
