Gold Reaches Record Rs 1.19 Lakh; Silver Rises Amid Festive Demand, Global Uncertainty
Gold prices have reached an unprecedented high of Rs 1.19 lakh per 10 grams, marking an increase of Rs 3,000 in just one day. This surge is attributed to a rise in safe-haven demand amid ongoing global political tensions and speculation concerning future rate cuts by the Federal Reserve. Silver has also seen a significant increase, hitting a record Rs 1.48 lakh per kg, up by Rs 3,000, reflecting similar trends in consumer behavior.
Impact of Global Uncertainties on Gold Prices
Recently, geopolitical disruptions, including a potential U.S. government shutdown and growing nationalist sentiments in Japan, have prompted a wave of investment in gold. Over the past year, gold prices surged by 52%, rising from Rs 78,000 per 10 grams this time last year. In India, when factoring in a 3% goods and services tax (GST), the effective price consumers must pay for gold is Rs 1,22,570 per 10 grams.
Festive Demand and Consumer Behavior
- High prices are pushing some consumers towards lightweight jewelry options.
- Ramesh Kalyanaraman from Kalyan Jewellers notes that traditional purchases continue despite financial constraints.
- Diwali and wedding seasons are driving significant demand.
In anticipation of these events, jewellers report robust pre-booking trends, indicating that customers are committed to making significant purchases during this festive season. Kalyanaraman emphasized that 22 karat and 18 karat jewelry remain the top choices among buyers.
Trends in Lightweight and Wedding Jewelry
According to Santosh Kataria, CMD of DP Abhushan, the demand for lightweight jewelry has increased by 20-25% this quarter. Additionally, interest in 18 karat and 14 karat gold jewelry has risen by 10-15%. The ongoing festive buying trend is heavily focused on wedding jewelry, particularly as numerous weddings are scheduled for the latter part of the year.
Silver Prices and Market Sentiment
As gold prices escalate, silver has also gained traction as an investment alternative. Kataria noted a more than 50% increase in silver demand, indicating its rising status among consumers. He referred to silver as “the new gold,” highlighting its attractiveness to investors.
Investment Caution Advised
Despite the ongoing demand, experts advise potential investors to tread cautiously. Jateen Trivedi from LKP Securities recommends against making large lump-sum investments at this stage. With recent price surges, the potential for short-term corrections in gold prices has heightened. Investors are encouraged to adopt a cautious approach in navigating the current market landscape.
