Gold Crosses ₹1 Lakh: A Reflection of Global Economic Shifts

Context: 

Gold plays a dual role in the global economy — as a safe-haven investment during times of crisis and a cultural and financial asset in countries like India. Recently, gold prices in India crossed the ₹1 lakh per 10 grams mark for the first time, reflecting significant economic and geopolitical shifts globally.
This development holds relevance for UPSC aspirants, especially under topics related to Indian Economy, International Trade, Monetary Policy, and Global Economic Trends.

Recent Development: Record Gold Prices in India

• In April 2025, the price of 24-karat gold in Mumbai reached ₹1,01,350 per 10 grams, while 22-karat gold touched ₹92,900.

• This marks the first-ever breach of the ₹1 lakh mark for gold in India.

Reasons Behind the Surge in Gold Prices

1. Global Price Rally

• International gold prices soared to $3,400 per ounce, a historic high.

• A weakening US dollar made gold cheaper for international buyers.

• The dollar fell to its lowest level since 2022, driven by policy uncertainty in the US.

2. Uncertainty Over US Monetary Policy

• President Donald Trump's announcement to overhaul the Federal Reserve created financial market instability.

• Trump's criticism of Fed Chairman Jerome Powell and demand for lower interest rates raised doubts about the Fed’s independence.

• Markets reacted to possible disruptions in monetary policy, shifting capital towards gold.

3. Geopolitical and Inflationary Concerns

• Ongoing Russia-Ukraine tensions and persistent inflation fears have boosted gold’s safe-haven status.

• The US Federal Reserve warned that proposed tariffs could hinder its economic goals, further driving investors toward gold.

4. Central Bank and Institutional Buying

• Increased gold purchases by China, other global central banks, and institutional investors.

• Concerns about the US debt crisis and slowing global growth led to higher gold accumulation.

5. Analyst Observations

• Experts cite escalating trade tensions, uncertain US economic direction, and sustained buying by major players as key reasons behind the surge.

India’s Gold Market: Structure and Significance

India's Position in the Global Market

• India is the second-largest gold consumer globally, after China.

• In 2024, India's gold demand was 802.8 tonnes, up from 761 tonnes in 2023.

• China topped with 985 tonnes of demand.

Monetary Value of Gold Demand

• Total value of gold demand in India increased by 31% in 2024.

• It rose to ₹5.15 lakh crore, up from ₹3.92 lakh crore in 2023. (Source: World Gold Council)

Gold’s Cultural and Financial Importance in India

Traditional and Cultural Significance

• Gold holds deep cultural roots in Indian society.

• Widely used in weddings, festivals, and inheritances, symbolizing wealth and prosperity.

Gold as a Financial Asset

• Used as a collateral for loans during times of financial need (e.g., education, healthcare).

• Especially vital during economic slowdowns, inflation, and uncertain global trade scenarios.

Rise in Gold Loans and Fintech Integration

• Gold loans have become a stable and preferred financing option.

• Rise in digital platforms, apps, and fintech solutions has increased access to gold loans, even in remote and rural areas.

• This has further strengthened the relevance of gold as a liquidity provider in times of need.

Conclusion: UPSC Relevance and Broader Implications

• This event reflects the interlinkages between global policy decisions and domestic markets.

• For UPSC, it highlights issues related to:

  • Global monetary policy

  • India’s external sector

  • Commodity markets

  • Socio-economic dynamics of asset ownership

• The surge in gold prices is not just a market trend but a symptom of deeper global economic anxieties.