Gold prices at record high: Will India’s jewellery demand take a hit?

Gold price today: The glow of gold is getting brighter with each passing day as investors increasingly flock to the yellow metal to safeguard their wealth from risky assets, which are falling relentlessly amid escalating global trade tensions sparked by Donald Trump tariff measures. 

Equities are the first casualties when global uncertainty spikes, prompting investors to shift their wealth into safe-haven assets such as gold, which has long been considered the safest investment during economic turmoil.

Another new milestone for gold

In Wednesday’s trade, spot gold prices touched another record high—now a new normal for the yellow metal in 2025—reaching $3,164 per troy ounce after Donald Trump announced reciprocal tariffs on 180 countries, further escalating global trade tensions.

As promised earlier, Trump on Tuesday unveiled new duties on trading partners, including India, using tariffs as a bargaining tool to push for lower duties on American goods.

Trump outlined a 10% baseline tariff on imports from all countries, with higher rates for nations with trade surpluses, including China (34%), the EU (20%), and Japan (24%), and a 25% tariff on foreign-made automobiles.

With his new reciprocal tariffs, Trump has invited major countries to take retaliatory measures, which economists believe could lead to a major global trade war, bringing the global economy to its knees.

After ending 2024 with stellar gains, gold prices continued their bullish momentum in 2025, receiving an additional boost after Trump took charge as the US President. Investors began the year with high hopes for pro-growth policies from the Trump administration but were impacted by a series of tariff-related headlines, prompting them to shift their portfolios toward safe-haven assets.

Gold prices ended the first quarter of 2025 with a 19% jump, marking the biggest quarterly gain since 1986.

Uninterrupted Rise: Prices jump 53% in last 2 years on MCX

To be precise, gold has been drawing significant support in recent years. First, the Russia-Ukraine war led the US to freeze Russian foreign exchange reserves, sparking concerns among global economies.

This prompted major central banks, particularly China, to accumulate gold in larger quantities, which is still ongoing. Then came the Middle East crisis, followed by a surge in China's retail demand and global central banks started cutting interest rates.

In the current year, gold has received an additional boost as Trump's protectionist measures have driven prices to record highs. This surge has even forced analysts to revise their target prices higher, as their previous projections were breached sooner than expected.

Over the last two years, spot gold prices have risen 60%. In the domestic market, prices on MCX have jumped from ₹59,612 per 10 grams to the current level of ₹90,986, resulting in a massive gain of 53%. 

Gold's steady climb: Will it impact Indian sales?

Now the question emerges as to whether the steady rise in gold prices will affect sales in India, the second-largest consumer of gold in the world. The yellow metal has a central role in the country’s culture, considered a store of value, a symbol of wealth and status and a fundamental part of many rituals.

According to the World Gold Council, Indian women collectively own around 24,000 tons of gold, which accounts for about 11% of the world’s total gold reserves in jewellery.

With gold prices continuing to rise, will Indians buy less of the precious metal? 

To understand the impact, Livemint sought expert advice from Mahendra Luniya, Digital Gold Expert and Chairman of Vighnaharta Gold. Edited excerpts:

Do you think India’s booming jewellery market will be able to withstand the pressure of rising gold prices, or will we see a slowdown in sales?

Gold prices have surged by 7% in the past month, 17% over the last quarter, and an impressive 27% over the past year. Given this rapid increase, the general public is adopting a wait-and-watch approach.

Footfall in jewellery stores has slightly decreased, but on the auspicious occasion of Padwa, around 800 kg of gold was sold nationwide—though slightly lower than last year. While consumers are now purchasing only as needed, overall demand has not dropped drastically. I don’t foresee a major downturn in the market.

As gold prices continue their upward climb, what impact do you foresee on the performance of organized jewellery players in India?

Signs of a slowdown are not evident in the organized gold market. Currently, there are no major festivals or wedding seasons, which naturally leads to lower sales. Additionally, with rising prices, many customers prefer to wait for price stability before making a purchase. However, once prices stabilize and the summer holidays end, we expect demand to rebound

In your opinion, is the central bank demand the main catalyst behind gold's historic price surge, or are other factors at play?

The rising gold prices are influenced not only by central bank purchases but also by increasing global uncertainties. The "America First" policy of former President Trump has led to retaliatory tariffs, and these tax measures are unlikely to be reversed anytime soon. Other countries are also making efforts to protect their economies and industries, further contributing to the rise in gold prices.

Meanwhile, ongoing global conflicts continue to fuel uncertainty. Israel has deployed its military in Gaza once again, Russia remains engaged in Ukraine, and the U.S. has launched attacks in Syria. Additionally, trade wars are having a significant impact on gold prices. Given these factors, gold is expected to cross the $3,300 mark soon and may even surpass $3,500. If the Indian Rupee fails to hold its ground, gold prices in India could reach record highs in the near future.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.