Gold rate in India: What resulted in the best weekly performance since March 2023 for the yellow metal?

Gold prices on Friday, November 22, ended around 5% up at approximately ₹77,700 per 10 gm of 24K gold. The rise in prices brought gold close to its all-time high of touching ₹80,000 per 10 gm during the start of the month. 

The rise in Multi Commodity Exchange of India (MCX) gold rates can reportedly be credited to the global uncertainty due to escalations in the conflict between Russia and Ukraine. The prices of gold go up when geopolitical situations create fluctuations in the market as the yellow metal is seen as a safe haven. 

When people start to lose confidence in currencies, they turn to safer investment tools like gold, and the increased demand for gold then further results in an increase in its prices. Gold has been on a ride in India, going up in the festive season and plunging down right after. The metal is now again on the rise, with a turbulent US economy after Trump’s win in the elections and market volatility following Ukraine’s first-ever strike on Russian territory. 

Notably, the market is seeing the US dollar getting stronger and the US Federal Reserve is cautious about cutting interest rates, which means that the rising trend in gold is at risk, as per a report by Live Mint citing commodity experts.

"Gold prices advanced by around 5% during the week, marking their best weekly performance since March 2023 and snapping a three-week decline. The rally was fueled by escalating geopolitical tensions between Russia and Ukraine, which have intensified missile attacks, driving safe-haven flows into gold”, Live Mint quoted Sugandha Sachdeva, Founder of SS WealthStreet as saying. 

This year, the markets observed a nearly 30% increase in gold prices year-over-year (YoY) around Diwali. Even with gold prices touching roofs, the demand for gold persisted during the festivities and showed positive trends. 

Factors like global market trends, currency value, demand and supply, inflation rates, government policies and market speculation impact the gold prices in India. 

Gold jewellery in India

Gold isn’t just a precious metal in India for market reasons, but it has traditional and cultural values attached to it. The yellow metal is widely used in religious ceremonies as well as weddings. For Indians, gold is an investment for reasons beyond its returns. 

With the ongoing wedding season, gold prices might see another jump as the demand increases. In 2024, as much as ₹5.9 trillion is expected to be added to India’s economy during the wedding season that commenced in November, with nearly 4.8 million weddings across the country, as per a study by the Confederation of All India Traders (CAIT). Last year, the figure was at ₹4.25 trillion with 3.5 million weddings.