In May 2025, the Indian bullion market witnessed a significant uptick in gold and silver prices, reflecting both global economic factors and domestic demand dynamics. Gold prices reached new heights, while silver prices also saw substantial increases, driven by various factors influencing the precious metals market.
Gold Prices Reach Record Levels
Gold prices in India have surged to unprecedented levels, with rates touching ₹89,963 per 10 grams in major cities like Delhi, Mumbai, and Chennai. This marks a notable increase from previous months, reflecting a broader trend of rising gold prices globally. The surge in gold prices can be attributed to several factors, including global economic uncertainties, inflation concerns, and increased demand for safe-haven assets.
Silver Prices Follow Suit
Silver prices have also experienced a significant rise, with rates reaching ₹1,06,200 per kilogram in cities such as Delhi and Mumbai. This increase is driven by a combination of factors, including heightened industrial demand, particularly in sectors like photovoltaics and electric vehicles, and a tightening supply in the global silver market. The Silver Institute projects a market deficit of 149 million ounces for the fifth consecutive year, further supporting the upward trend in silver prices.
Investment Demand Drives Market Dynamics
The rising prices of gold and silver have spurred increased investment demand in India. Gold ETFs have seen a surge in inflows, with assets under management nearly doubling in the past year. Investors are increasingly turning to gold as a hedge against economic uncertainties, attracted by its liquidity, transparency, and cost-effectiveness compared to physical gold.
Impact on Jewellery Demand
While investment demand for gold and silver has risen, the surge in prices has led to a moderation in jewellery demand. Consumers are opting to sell old jewellery pieces rather than purchasing new ones, a trend observed during the wedding season. This shift is partly due to the higher costs associated with new jewellery purchases, prompting individuals to recycle existing assets.
Projections for 2025
Analysts project continued growth in gold and silver prices throughout 2025. ICICI Securities forecasts gold prices reaching ₹85,000 per 10 grams and silver prices hitting ₹1,10,000 per kilogram, driven by factors such as central bank buying, trade war concerns, and industrial demand for silver. This optimistic outlook reflects the ongoing strength in the precious metals market.
Conclusion
The rise in gold and silver prices in the Indian bullion market underscores the growing investor interest in precious metals as safe-haven assets amid global economic uncertainties. While jewellery demand has been tempered by higher prices, the robust investment demand highlights the changing dynamics in the precious metals market. As 2025 progresses, the outlook for gold and silver remains positive, with expectations of continued growth driven by various economic and industrial factors.
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