From global risks to festive demand: What’s fuelling gold’s 2025 surge ahead of Akshaya Tritiya

Gold prices in 2025 are scaling fresh highs as a confluence of global risks and economic uncertainty sends investors flocking to the yellow metal. With equity markets facing turbulence and inflation remaining stubborn, gold has emerged as one of the year’s top-performing assets.

One of the key drivers behind the surge is rising geopolitical tension. Escalating conflicts—from the US-China standoff to friction in the Middle East—have triggered a flight to safe-haven assets. “Uncertainty always boosts demand for gold,” analysts note, as investors seek refuge from volatility.

SEBI-registered Research Analyst A K Mandhan, in a post on X, highlighted that the growing fear of an economic slowdown is adding to the price rally. 

With sluggish growth in major economies like the US, Germany, and China, many investors are bracing for a potential recession or even stagflation. Persistent inflation—despite aggressive rate hikes in recent years—has further pushed investors to consider gold as a hedge against eroding purchasing power.

Central banks have also played a major role in this rally. Countries like China, Russia, and India have been aggressively buying gold to diversify away from the US dollar. According to market data, central bank gold buying hit record levels in 2024 and has continued unabated in 2025.

Meanwhile, the US dollar has weakened as the Federal Reserve is expected to begin cutting interest rates later this year. A softer dollar makes gold cheaper for foreign investors, boosting demand globally.

"Gold prices in 2025 have been surging to record highs, and there are multiple solid reasons behind this rally... Gold isn’t just glittering—it’s glowing due to a perfect storm of macroeconomic, geopolitical, and financial forces. Investors see it as both a hedge and a haven, making it a hot asset this year," Mandhan highlighted.

Retail investors are also piling into gold—via ETFs, digital gold, and physical bars—as stock market volatility and uncertain bond yields raise concerns over portfolio stability. “Gold offers both emotional security and a financial hedge,” Mandhan explained.

Market expectations of interest rate cuts are another key factor. As real interest rates fall, the opportunity cost of holding non-yielding assets like gold decreases, making them more attractive.

The broader de-dollarisation trend is also gaining momentum. Several countries and trade blocs are reducing their reliance on the US dollar, turning instead to gold as a neutral reserve asset for trade and settlement.

Stress in the banking sector, though limited, has not gone unnoticed. Financial instability—especially following mini-crises in recent years—has prompted some investors to shift allocations toward gold.

Compounding all this is a supply-side story. Gold mining output has plateaued even as demand surges, tightening the supply-demand balance and adding further upward pressure on prices.

Traders, too, are getting in on the action. A wave of speculative buying through gold futures and options has helped propel prices as bets rise on a continued rally.

For investors, the takeaway is clear: gold isn’t just glittering—it’s glowing in 2025, driven by a potent mix of macroeconomic risks and strategic demand.

“This year Gold and Silver prices have experienced significant movements due to ongoing trade tensions, rate cuts expectations, geopolitical uncertainties and weakening dollar. So far gold has soared over 25%, including a 6% gain since 2nd April post tariff announcement by US. Going forward gold will remain strong in the short term if trade tension escalates. However, long-term outlook remains bullish, supported by strong central bank purchases and geopolitical uncertainties. While lately silver prices have experienced some volatility but the long-term trend remains upward, supported by industrial demand, lower interest rates expectations and continued economic uncertainties,” said Satish Dondapati, Fund Manager, Kotak Mahindra AMC.