By [ The hindu time ] | June 12, 2025
Gold, long revered in India as both a cultural treasure and a financial asset, is once again in the spotlight. As of mid-June 2025, domestic gold prices have shown signs of recovery, buoyed by global uncertainties, inflationary concerns, and shifting investor sentiment. With gold trading above ₹96,600 per 10 grams and aiming for the next technical target of ₹98,000, market watchers are closely analyzing what this means for investors, jewellers, and policymakers.
A Resilient Asset in Changing Times
Gold’s significance in India goes beyond its financial value. It is deeply woven into the cultural fabric of Indian society — from weddings and religious festivals to long-term wealth preservation. In fact, India ranks among the top consumers of gold globally, with annual demand often exceeding 700 tonnes. This demand, largely driven by households and small investors, means that even small shifts in price or sentiment can have wide-ranging implications.
After several weeks of consolidation, gold has now broken above a falling trend channel, indicating a possible bullish reversal. This technical move is gaining attention in both bullion trading circles and among retail investors looking for safe havens amid ongoing global volatility.
Domestic Price Dynamics
On June 12, gold was trading at approximately ₹96,800 per 10 grams, marking a modest but meaningful rebound from recent lows. Technical support has been established at ₹96,600, while near-term resistance is expected at ₹98,000. A sustained move above this level could trigger additional upside toward ₹99,500 or even ₹100,000 in the coming months.
The current rally is being supported by a combination of domestic and international factors, including:
A weakening Indian rupee
Rising inflation expectations
Safe-haven demand due to geopolitical tensions
Anticipated policy easing from global central banks
Rupee Weakness Adding Tailwinds
One of the most influential domestic factors is the rupee’s recent depreciation against the US dollar. With the INR hovering around ₹84.50 per USD, the cost of importing gold — which is priced internationally in dollars — has risen significantly. This, in turn, supports higher domestic gold prices.
Currency depreciation also encourages Indian investors to shift towards hard assets like gold as a hedge against declining purchasing power. According to recent Reserve Bank of India (RBI) data, currency volatility has been a top concern for both institutional and retail market participants this quarter.
Central Bank Watch: Rate Cuts on the Horizon?
Globally, market sentiment has been shaped by expectations that major central banks, including the US Federal Reserve and the European Central Bank, may begin to lower interest rates in the second half of 2025. While the RBI has maintained its repo rate at 6.50%, any dovish signals from global counterparts could influence Indian policy as well.
Lower interest rates typically reduce the opportunity cost of holding non-yielding assets like gold, making it more attractive to investors. This relationship has historically led to price surges during periods of monetary easing.
Festive & Wedding Demand Returning
The Indian jewellery market, which accounts for nearly 50% of total gold demand in the country, is also showing signs of revival. With wedding season preparations underway and key festivals such as Raksha Bandhan and Ganesh Chaturthi on the horizon, jewellers are reporting a gradual pickup in footfall and advanced bookings.
According to the All India Gem and Jewellery Domestic Council (GJC), there has been a 10–12% rise in inquiries and pre-orders compared to the same period last year, suggesting that sentiment is turning positive.
This trend is especially significant given the muted demand seen earlier in the year, when high prices and global uncertainties made consumers cautious.
Investment Perspective: ETFs, SGBs, and Digital Gold
While traditional gold buying continues to dominate, Indian investors are increasingly diversifying into paper and digital gold instruments:
Gold Exchange-Traded Funds (ETFs): According to AMFI data, gold ETFs witnessed net inflows of ₹720 crore in May 2025 — the highest in five months.
Sovereign Gold Bonds (SGBs): The latest SGB tranche saw robust subscriptions, particularly from high-net-worth individuals and family offices looking for long-term capital appreciation with tax benefits.
Digital Gold: Platforms like Paytm Gold, PhonePe, and Groww report a surge in millennial users investing in small quantities of gold, especially during auspicious dates.
These investment channels provide flexibility, liquidity, and in many cases, better pricing compared to physical gold — making them a key part of gold’s modern transformation in India.
Risks on the Horizon
Despite the positive momentum, several risks remain that could impact the trajectory of gold prices:
Stronger Economic Data from the US or India: Could delay rate cuts and strengthen local currencies, weighing on gold.
Geopolitical Stability: A de-escalation in global conflict zones may reduce safe-haven demand.
Policy Intervention: The Indian government has in the past adjusted import duties or launched gold monetization schemes to manage the current account deficit — any such move could influence prices and demand.
Expert Opinions
Economists and market analysts remain cautiously optimistic about gold's performance in the second half of 2025. According to Ajay Kedia, Director at Kedia Commodity, "The breakout above ₹96,600 is a technically significant move. If prices hold above this level, we could see a test of ₹98,000 shortly. Investors should watch for inflation data and RBI commentary for further cues."
Similarly, Somasundaram PR, Regional CEO at the World Gold Council, noted in a recent statement that India’s long-term gold demand fundamentals remain strong, and digital innovation is helping drive more efficient access and transparency in the gold market.
What Should Investors Do Now?
With gold prices gaining traction and market fundamentals aligning in its favour, investors in India have several strategic options:
Short-Term Traders: Look to ride momentum with strict stop-losses below ₹96,500, targeting ₹98,000–₹99,000.
Long-Term Investors: Use dips as opportunities to accumulate via SGBs or ETFs, particularly ahead of anticipated rate cuts.
Jewellery Buyers: Consider advance booking or price-lock schemes from reputed jewellers, especially with festival demand rising.
Conclusion
India's gold market is entering a critical phase as we move deeper into 2025. With prices stabilizing above key support levels, favourable macroeconomic conditions, and strong cultural demand drivers, the yellow metal appears well-positioned for further gains.
However, investors should remain vigilant. Global economic data, rupee fluctuations, and domestic policy shifts will continue to shape the market landscape. As always, diversification and disciplined strategy remain essential in navigating the glitter and volatility of India’s gold market.
by Rohit Thakur | 12 june 2025
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