The global gold price surged by 27% between 2024 and 2025, thanks to central bank rate reductions as well as a spike in demand for safe havens.
The sharp rise in gold prices globally has affected the domestic market in major consumers of gold, such as India and China.
The rupee’s depreciation in the last few months has made the situation worse for Indian consumers. A weaker rupee increases the cost of imports for Indian consumers, since gold is sold in dollars.
The higher gold prices in the domestic market have deterred buyers across Canada from making retail purchases.
In an exclusive interview for HCD Prithviraj K. Kothari (Managing Director, RiddiSiddhi Bullions Limited) shares his views on the future of gold in 2025.
Kothari believes that India will continue to have a low demand for gold due to the high price of gold. He expects seasonal growth during wedding and festive periods.
The following are excerpts of the full interview.
Invezz: What do you think of India’s demand for gold in the coming months, given high prices?
Due to the high price of gold, India’s demand for it is expected to be subdued in the coming months.
Demand may increase during wedding and festive seasons due to cultural and tradition factors.
Investors could stabilize investment demand by hedging against inflation and uncertainty.
In general, higher prices could shift consumers’ attention to lighter weight jewelry and digital gold, while rural demand may remain weak due to budget constraints.
Invezz: Are you expecting global prices to rise further in 2019 after the 27% hike that occurred last year?
Global gold prices could rise by 27% in 2024 due to geopolitical uncertainty, the weakening dollar and central bank purchases.
The pace of growth may slow as central banks implement more balanced monetary policy and the inflation in major markets stabilizes.
Gold’s appeal could be limited by rising interest rates, and physical demand in price sensitive regions such as India might soften. However, any further increase in geopolitical or economic tensions could drive prices up, maintaining gold’s status as a “safe-haven” asset.
India’s spot market in discount
Invezz – What’s the discount or premium on the spot market today? What has been the impact of global price increases on demand?
The Indian gold market has a discounted price of $17 an ounce, compared with international spot prices.
The discount is due to the high gold price in local currency, which has reached its monthly maximum, as well as to the unlucky “Khar Mass”, leading to a reduced demand.
In the Hindu calendar, khar mass is when no auspicious activity should be done.
India’s demand for gold has been significantly affected by the rise of global prices. Prices have risen, which has deterred many buyers and led to a decrease in demand.
The depreciation in the Indian Rupee also makes gold imports costlier, which further reduces demand.
Invezz (English): What impact has the reduction in import taxes last year had on illegal smuggling, according to you?
In 2024, the government reduced the import duty on gold. This led to an overall decline in illegal activities.
The shift in policy encouraged greater imports by legal means. This increased transparency and revenue.
Even though smuggling is now less prevalent, it still exists due to the high demand at home and differences in regional prices. To completely stop illicit trade, it is important to continue enforcement as well as refine policy.
Demand for ETFs and spot prices
What price do you think Indian gold spot prices will trade at by the first quarter of this year?
The Indian gold spot price is expected to be between 81,000 and 82,000 rupees (935 to $947) per 10 grams by the end of 2025. The current spot price in Mumbai, India is 79,239 rupees for 10 grams.
The projections are influenced by the global price of gold, the weakening rupee in India, and the local trends.
The wedding season and global central bank policy could support safe-haven demand.
A significant breakout in price would depend on unanticipated geopolitical and economic events, which may change investor sentiment drastically.
Do you think that gold ETFs will be more popular in the future?
The Indian ETF market is predicted to grow in demand in 2025 due to a combination economic recovery, financial literacy and increased interest in digital investments.
ETFs are attractive because of their transparency and cost effectiveness. They also allow you to follow global gold prices, without having to store physical gold.
The volatility of the market and concerns about inflation may make them more attractive as a hedge. Demand will be influenced by price stability, investor confidence, and incentives from policy to promote a wider adoption.
Silver’s potential in comparison to gold, particularly with the use of EVs.
Silver has a much higher potential than gold by 2025 due to the critical role it plays in the EV sector.
Silver’s usage in battery connectors and charging systems will grow due to the global adoption of EVs.
Its applications in electronics and renewable energy also increase demand.
Silver’s demand from industry can lead to a price increase, particularly if the green technology sector expands rapidly. Silver’s higher volatility can make it more risky than gold.
India discontinues its sovereign gold bonds
Invezz: What is your opinion about the Government’s lack of interest in the continuation of the sovereign gold bonds schemes?
There are several reasons why the Indian government might not want to continue with its Sovereign Gold Bonds (SGB) scheme.
Cost of finance: The government can incur a high cost when issuing SGBs. This includes paying interest to investors.
Recent reductions in gold import duty may have reduced the relative appeal of SGBs. Physical gold could become more attractive with lower import costs.
Other priorities may take precedence: It is possible that the government will prioritize other economic and fiscal objectives above continuing to issue SGBs.
Invezz: Can you suggest any other ways to increase demand for digital gold investments?
Tax incentives can be introduced to encourage digital gold investment, including lower capital gains taxes or exemptions from long-term holdings.
Diverse investor groups could be attracted by schemes like the “Digital Gold Savings Plans”, which allow systematic investment, and “Gold-linked pension plans”.
The security of digital gold could be further enhanced by collaborations with fintech platforms that promote micro-investments, and guarantees from the government.
Fed takes a cautious approach to monetary policy
Invezz says that gold may be affected by a slowdown in the pace of monetary ease from the US Fed. What’s your take on a Fed rate-cut scenario?
In 2025, the Federal Reserve is likely to maintain a cautious monetary policy due to inflationary pressures that persist and to prevent destabilizing growth.
The Fed could adopt an approach based on data, which balances the labor market’s resilience and inflation targets.
Gold’s momentum would be limited by a gradual rate reduction that keeps borrowing costs high.
Gold prices could be supported by a more aggressive approach to easing if there is a sharp downturn in the economy or if geopolitical uncertainties increase.
The Fed’s overall approach indicates a moderate impact for gold with a cautious but steady monetary course.
Interview: India’s gold demand is likely to remain subdued by 2025 due to high prices and rupee depreciation. Prithviraj kothari first appeared on The ICD
This site is for entertainment only. Click here to read more
