Gold, once considered a safe-haven investment, has once again created a stir in the global commodity market. Following the ongoing diplomatic turmoil in West Asia and the start of talks between Iran and Oman regarding the movement of oil and cargo ships through the Strait of Hormuz in the Persian Gulf, the bullion market is witnessing an unexpected surge. Spot gold and gold futures prices have risen to their highest levels in seven weeks. This massive surge in the global bullion market is also having a direct impact on the Indian bullion market, where a record increase has been recorded in the price of 24-carat pure gold.
Why did the Hormuz crisis and diplomatic talks cause gold prices to rise?
A preliminary agreement between Iran and Oman to temporarily open a shipping route through the strategically important Strait of Hormuz in West Asia has created significant ripples in financial markets. Crude oil prices fell after Iran’s Foreign Ministry indicated it would partially reopen the waterway for two to four months, but global investors turned to gold as a safe haven amid uncertainty about the future of inflation and interest rates.
Market experts believe that geopolitical risks have not been completely averted due to the non-reopening of the Strait of Hormuz and the US President’s statements. Furthermore, fluctuations in oil prices have indicated a potential slowdown in the global economy. In such a situation, large institutional investors, hedge funds, and central banks have begun withdrawing money from bond and currency markets and investing it in safe haven gold, leading to a record surge in gold prices in the international spot market (XAU/USD) to cross $4,300 per ounce.
Expectations of US Federal Reserve decisions set gold on fire
The policies of the US Federal Reserve, the central bank, have been a major factor behind this meteoric rise in gold prices. The sudden decline in crude oil prices has raised hopes of a slowdown in US inflation, leading to speculation that the Federal Reserve will refrain from raising interest rates in the coming months or may even cut them.
It is a rule of the financial market that whenever interest rates fall or the US Dollar Index and US Treasury Yield weaken, the attractiveness of non-interest bearing assets, i.e. gold, increases manifold. The weakening of the dollar made it cheaper for holders of other foreign currencies to buy gold in the international market, leading to a significant increase in global demand, and gold prices reached a new 7-week high.
Indian bullion market status: Latest 24 carat and 22 carat gold prices
Capitalizing on the rally in the international bullion market, gold prices have seen a sharp rise in both the Indian futures market (MCX) and local spot markets. 24-carat gold with 99.9% purity is once again reaching new highs in Indian markets.
The average prices of 24 carat (24K) and 22 carat (22K) gold recorded today in major bullion markets of India are as follows:
24-carat gold (10 grams): The price of 24-carat gold in India has risen to approximately ₹143,500 to ₹146,800 per 10 grams. The price of 24K gold per gram is approximately ₹14,350 to ₹14,680.
22 carat gold (10 grams): The price of 22 carat gold, used in making jewellery, has increased from around ₹1,31,500 to ₹1,34,600 per 10 grams.
18 carat gold (10 grams): The rate of 18 carat gold used in lightweight jewellery remains around ₹1,07,800 to ₹1,10,100 per 10 grams.
What are the 24K gold rates today in major cities of India?
Due to the difference in local taxes, GST (3% GST) and making charges levied in different states, there is a slight difference in the prices of gold in different cities of the country:
Delhi: The price of 24K gold in the capital Delhi has been recorded at ₹14,414 per gram (ie ₹1,44,140 per 10 grams).
Mumbai: 24K gold is trading at ₹14,399 per gram (i.e. ₹1,43,990 per 10 grams) in the financial capital Mumbai.
Kolkata: 24K gold has reached the level of ₹14,399 per gram in the bullion market of Kolkata.
Chennai: The price of 24K gold remains at ₹14,399 per gram in Chennai, the major market of South India.
Lucknow and Jaipur: 24K gold is being sold at the rate of ₹14,414 per gram in Lucknow and Jaipur, the capital of Uttar Pradesh.
What will be the impact of the rise in gold prices on common buyers and investors?
This sharp rise in gold prices, just ahead of the upcoming festive season and wedding season in India, has raised concerns among ordinary middle-class families and jewelry buyers. Those planning to purchase gold jewelry for weddings may now have to increase their budget or opt for lighter jewelry designs.
On the other hand, retail and institutional investors investing in gold are happy. Investors investing in Digital Gold, Gold ETFs, and Sovereign Gold Bonds (SGBs) have seen excellent returns from this rally. Market experts advise that if a new investor wants to enter gold at this high level, they should adopt a ‘Systematic Investment Plan’ (SIP) or a strategy of buying in small amounts on dips (Buy on Dips) instead of investing a lump sum.
Will gold prices rise further in the future? Learn from market experts
Commodity and financial market analysts believe that gold’s long-term bull run is far from over. As long as central banks around the world continue to purchase large quantities of gold to protect their economic assets and uncertainty persists on the geopolitical front, gold prices will continue to receive strong support.
If international gold manages to break the resistance level of $4,350 per ounce, 24-carat gold prices in Indian markets could soon surpass a new all-time high of ₹1.5 lakh per 10 grams. While prices may decline slightly in the short term due to technical corrections or profit-booking, gold will remain the most reliable inflation hedge in the long term.