Gold prices in India can soar to Rs 1 lakh in H2 2025: Report

Gold prices in India are expected to rise significantly in the second half of 2025, potentially reaching Rs 1 lakh per ten grams, according to a recent report by ICICI Bank Global Markets. Despite a global trend of declining gold prices, domestic prices saw a 0.6% increase in June, driven by a 0.2% depreciation of the Indian Rupee. The report notes, "Local gold prices are expected to continue trading with an upside bias moving from a near-term range of Rs 96,500 to Rs 98,500 per ten grams to Rs 98,500 per ten grams to the Rs 100,000 per ten grams range in H22025."

The report, as reported by news agency ANI, highlights a decline in gold imports, which fell to $2.5 billion in May from $3.1 billion in the previous month, indicating a decrease in demand influenced by elevated prices. Conversely, investment demand for gold in India has remained strong, as evidenced by the net ETF inflow of Rs 2.92 billion in May, following two months of outflows. This robust investment-related demand signals that despite weaker jewellery demand, gold remains a popular investment choice among Indians. The resilience of investment demand underscores the metal's appeal as a hedge against economic uncertainties and currency fluctuations.

On a global scale, the report mentions that while gold prices have generally decreased, the demand for investment in gold remains robust, supported by increased ETF flows. The SPDR ETF flows in gold rose from 930 tonnes at the beginning of June to 948 tonnes by July. Additionally, speculative net long positions increased by approximately 13,000 lots in the last month, underscoring continued interest in the yellow metal despite a recent stall in its bull run. This increase indicates that investors are still betting on gold's potential for future gains, even amidst a complex global economic landscape.

The report attributes the recent stall in gold's global price increase to easing geopolitical tensions and positive developments in international trade. A significant factor has been the ceasefire agreement between Israel and Iran, which has improved risk sentiment in the markets. Furthermore, expectations of a reduction in the trade-war escalation, as the US works towards finalising trade agreements with several countries, have contributed to stabilising prices. "The upshot is that the easing in geopolitical tensions and expectations that trade-war 2.0 could ease in magnitude have worked to limit further sharp upside emerging in gold prices," the report observes. The potential for reduced trade conflicts could further temper gold's appeal as a safe-haven asset, affecting its price trajectory.

The outlook for gold in 2025 suggests a complex interplay between domestic factors and global trends. While rising domestic prices and strong investment demand point towards potential growth, global influences like geopolitical stability and trade agreements play a crucial role in determining the extent of price surges in the coming months.

However, gold, which has soared over 40% in dollar terms over the past year, may be approaching the peak of its current rally, according to several economists and analysts. Experts caution that the precious metal, which has set new price records since the Covid era amid geopolitical tensions and central bank purchases, now faces short-term downside risks. Firms like Citi, Motilal Oswal, and BMI, a research arm of Fitch Ratings, are signalling a potential end to gold’s remarkable run as shifting global economic conditions erode its safe-haven appeal.

Citi projects that gold could range between $2,500 and $2,700 an ounce by the second half of 2026, while Motilal Oswal notes that yearly gains exceeding 32% are historically uncommon. Meanwhile, BMI warns that downside pressures are mounting, though a full retreat to pre-Covid price levels remains unlikely.