Will gold prices rise further? Should we buy now or wait? How long will this rally last?

News Topical, Digital Desk : Over the past year, gold has fallen from ₹79,000 per 10 grams to ₹1.31 lakh per 10 grams. Rajiv Kumar spoke with Madan Sabnavis, Chief Economist at Bank of Baroda, about why gold prices are rising and whether they will continue. Here are the highlights...

Question: What is the reason for the increase in gold prices?

Answer: Geopolitical circumstances have created a global environment of uncertainty. Since February of this year, the uncertainty has increased following the US's tariff policy change, leading people to shift from the stock market to safer investments like gold. Retail gold investment ( gold investment tips ) has increased in India and China. These two countries have a strong appetite for gold and are the world's largest consumers of gold.

Secondly, in India, interest rates on bank deposits are very low these days. This has also increased people's inclination towards investing in gold. People are considering buying gold better than keeping it in savings accounts. The attraction towards Gold Exchange Traded Funds (ETFs) is also increasing rapidly. Through this, even a small amount can be invested in gold and its profit is received according to the gold rate. Nowadays, gold has become a major part of our investment portfolio. Apart from this, the demand for gold is also increasing rapidly due to purchases by central banks around the world. Central banks of many countries like America, China, Poland, India are purchasing more gold.

Question: A fall in the price of gold is also being predicted?

Answer: After the COVID-19 pandemic, it has been observed that once the price of gold rises, it tends to remain above that level, with only a slight decline. Before COVID-19, gold prices fell by up to 10 percent. Therefore, no predictions can be made regarding a decline in gold prices. Secondly, the US wants to weaken the dollar to support its exports. The dollar has been weakening for the past few days. Whenever the dollar weakens, gold prices will rise. There is considerable turmoil in the US right now, which is likely to weaken the dollar. Consequently, the demand for gold may continue to rise.

Q: Is limited production also a reason for the price hike?

Answer: Absolutely. Items like crude oil and gold cannot be produced to keep pace with demand. It's not as if their production can be increased as demand increases. Gold is mined in specific locations.

Question: Does gold buying increase when prices rise? Answer: This happens because consumers fear that the price of gold may rise further, so they rush to buy. Gold is widely used in weddings in India. Therefore, those who are getting married see the rise in prices and start buying.

Question: Considering the high prices, the common man will not be able to buy gold?

Answer: This is not true. There are many ways to buy gold in India. Even those with savings of ₹1,000 can buy gold. Investing in ETFs or various schemes can also be used to purchase gold with those small savings. In India, gold is deeply ingrained in people's sentiments. They will buy it, even if in small quantities.

Question: These days there is a lot of rise in silver prices, what is the reason?

Answer: Whenever gold prices rise, silver prices will also rise. Both move together. When gold prices rise, people think, "Let's buy silver." This further increases demand. In India, it's customary to give silver coins and other items on every small occasion. This also boosts silver demand. Industrial use of silver is also increasing these days.

Read More: Stock Crash: People started selling shares as soon as they opened – lower circuit was applied after a huge fall