Gold surges to Rs 1,04,950 amid tariff tensions, safe-haven demand. Should you invest before Diwali?

Gold climbed to a three-week high and silver to a five-week high in global markets, with India witnessing a historic surge in silver prices, which closed above Rs 1,17,000 per kilogram for the first time. The price of 24-carat gold rose Rs 10 in early Saturday trade, with ten grams selling at Rs 1,04,950, according to GoodReturns. Similarly, 22-carat gold increased Rs 10 to Rs 96,200 per ten grams. Silver also advanced Rs 100, trading at Rs 1,21,000 per kilogram.

This year, gold prices in India have surged about 32%, drawing significant investor attention. Starting at ₹80,000 per ten grams in January, spot gold on the Multi Commodity Exchange crossed Rs 90,000 in March and recently surpassed the Rs 1-lakh mark. Internationally, gold reached $3,392 per ounce in early May and has hovered near $3,368 in mid-June. Analysts attribute this rally to geopolitical tensions, a weakening U.S. dollar, and the rupee’s depreciation, making gold an attractive domestic hedge.

Aksha Kamboj, Vice President of the India Bullion & Jewellers Association and Executive Chairperson of Aspect Global Ventures, said sources close to the developments indicated that "robust jeweller demand for the upcoming festive season has driven the Indian gold market. Domestic futures on MCX hit a three-week high of Rs 1,03,350, reflecting investor optimism amid global uncertainty and a weakening dollar index." She added that U.S. tariffs of 50% on Indian exports have also heightened demand for safe-haven assets like gold.

Manoj Kumar Jain of Prithvifinmart Commodity Research noted that U.S. GDP data at 3.3% and falling jobless claims have been digested by the market, while safe-haven buying continues. “Gold crossed $3,454 and silver $39.10 per troy ounce, and could show further strength,” sources close to the developments said. The U.S. Dollar Index was hovering near 97.99, indicating volatility in global currency markets.

Rahul Kalantri, VP Commodities at Mehta Equities, added, “Bullion prices continued upward amid safe-haven buying and dollar index profit-taking. Silver reached a historic high domestically, signaling strong local demand.”

For investors, MCX support and resistance levels were suggested: Gold has support at Rs 1,01,750-1,01,400 and resistance at Rs 1,02,550-1,02,800, while silver support stands at Rs 1,16,500-1,15,800 and resistance at Rs 1,18,000-1,18,850. Sources indicated buying silver on dips around Rs 1,16,500-1,16,000 could yield targets of Rs 1,18,000-1,18,800.

Why the high

Praveen Singh, Head of Commodities and Currencies at Mirae Asset ShareKhan, attributed the rally to “intensified macroeconomic and geopolitical pressures, including US fiscal instability, rising debt, and waning dollar confidence.” Global debt hitting $324 trillion and geopolitical conflicts have bolstered gold’s appeal as a safe-haven. Kaynat Chainwala, AVP at Kotak Securities, added that dovish signals from the U.S. Federal Reserve and concerns over central bank independence are further supporting gold prices.

ETFs getting a push

Investor interest in gold ETFs has also risen, with July seeing net inflows of ₹1,256 crore, marking the third consecutive month of gains. Globally, gold ETF holdings have increased 11.5% year-to-date, adding nearly 310 metric tonnes. Singh said ETF inflows reflect sustained demand and contribute to higher physical holdings, reinforcing gold’s strategic role in volatile markets.

Festive demand

Seasonal demand is another key factor. India, the world’s second-largest gold consumer, is approaching the festive and wedding season, traditionally a period of high physical gold demand. Chainwala noted, “Festive and wedding season demand, combined with ongoing uncertainties around US sanctions and tariffs, could keep domestic prices elevated, especially with a weaker rupee enhancing gold’s appeal as a domestic hedge.”

With strong domestic consumption, rising investor interest in ETFs, and global macroeconomic pressures, gold and silver are expected to remain in focus, offering investors both a hedge and potential opportunity amid continuing market volatility.