The Survey attributed the dazzling run of gold to investors reducing their exposure to the dollar in view of the uncertainty over global policies. Photo Credit: SAHIBA CHAWDHARY

Taking note of the unabated rally in gold and silver, the Economic Survey has said their prices are likely to continue increasing due to their sustained demand as safe-haven investments amid global uncertainties.

It will likely continue unless a durable peace is established and trade wars are resolved, it said.

Pointing out that some commentators feel that the torrid pace set by gold and silver in 2025 may not be sustained, it said if they are proven right, core inflation excluding precious metals may be higher,not lower.

“In conclusion, India’s inflation rate – headline and core excluding precious metals – will likely be higher in FY27 than in FY26. However, we believe it is unlikely to be a concern,” it said.

The survey’s comments come in the wake of gold surging to ₹1.75 lakh per 10 gm and silver to ₹3.79 a kg in the Mumbai market. In the futures market, silver has already topped ₹4 lakh a kg and gold over ₹1.9 lakh.

Sustained demand

Sustained demand for gold, even during periods of elevated global gold prices, further pressures the trade balance. In the previous fiscal, India’s import composition continued to be dominated by petroleum crude, gold and petroleum products, with these sectors accounting for over one-third of total imports.

“…gold imports increased by 27.4 per cent (YoY). The increase in gold imports may be attributed to a rise in gold prices, increasing by 38.2 per cent (YoY) and driven by strong domestic consumption,” said the survey.

The Survey attributed the dazzling run of gold to investors reducing their exposure to the dollar in view of the uncertainty over global policies, particularly due to the trade war between the US and other countries.

A fallout of the rise in prices of precious metals has been a substantial rise in loans offered against gold jewellery. The loans against gold jewelery more than doubled to 125.3 per cent, in view of the rise in the yellow metal’s prices.

wgc outlook

Regulatory measures such as revised guidelines on voluntary pledge of gold and silver jewelery as collateral for small business loans have helped in improving credit flow to the MSME segment.

This is also reflected in the World Gold Council’s 2026 outlook in which it said that Indian consumers had pledged over 200 tonnes of gold jewelery through the formal sector in 2025 alone.

“Anecdotal evidence suggests there is almost as much gold backing loans from the informal sector,” it said. The council said any setback to the Indian economy could lead to large-scale liquidation of the precious metal offered as collateral.

Justifying RBI buys?

The Survey said the gold component in foreign currency assets of the country increased to $117.5 billion as of January 16, 2026, compared with $78.2 billion at the end of March 2025.

“This increase reflects both valuation gains during a period of elevated global gold prices and a continued preference among central banks for diversifying into non-dollar reserve assets,” it said.

Probably justifying RBI’s gold purchases, the survey said the growing share of the yellow metal in reserves aligned with a broader international pattern where many emerging markets have increased gold holdings amid geopolitical uncertainty and shifts in the global interest-rate cycle.

Published on January 29, 2026

On Thursday morning, silver March futures soared to ₹4.20 lakh a kg on MCX before easing to ₹4,13,200. | Photo Credit: istock.com

Silver’s spectacular rally continued with its prices surging to a new record, while futures topped ₹4 lakh a kg in India. Gold exceeded $5,500 an ounce in the global market before paring gains. But late in the evening, the precious metals complex started paring its gains.

Thursday’s rally was fueled by the dollar falling to 4-year low and investors shifting from sovereign bonds and currencies to precious metals. Geopolitical crises with the US threatening Iran over leadership change. Tehran upped the ante by denouncing President Donald Trump’s comments as “violation of Iraq’s sovereignty”.

Over the past few weeks, geopolitical crises, US’ tariff disputes with various nations, Washington locking horns with the EU and the current Iranian situation have buoyed precious metals with prices of silver doubling in a month-and-a-half and of gold in 100 days.

Silver, gold prices today

At 2040 hours IST, gold was quoted at $5,423.66 an ounce, and gold April futures ruled at $5,445.24. In India, gold in the Mumbai spot market ended at ₹1,75,340 per 10 gm. On MCX, gold April futures quoted at ₹1,88,790 gm after surging to ₹1,93,096.

Silver soared over $120 an ounce before pulling back to $113.69, and silver March futures on COMEX were quoted at $113.739 an ounce. In the Mumbai spot market, silver ended at ₹3,79,988 a kg, while on MCX, March futures soared to ₹4,20,048 a kg before easing to ₹4,06,800.

Platinum rose, but slipped to $2,636.20 an ounce, and palladium declined to $2,034 an ounce.

Gold has increased by nearly 30 per cent since the beginning of the year, silver by 66 per cent, platinum by 33 per cent and palladium by 29 per cent.

Safe-haven rush crowds trades

Apurva Sheth, Head of Market Perspectives and Research, SAMCO Securities, said although the US Fed kept the interest rates unchanged, the market shrugged off its credibility. “The rally, especially in gold, indicates some sense of concerns about Fed’s independence and counterparty risk. The S&P500 to gold ratio dropped 20 per cent this month and hit its lowest levels since October 2013. This indicates that trust in financial assets is eroding rapidly,” said Sheth.

Renisha Chainani, head of research at Augmont, said gold is increasingly viewed not just as a crisis hedge, but as a neutral, reliable store of value across macro regimes.

In a note, White Oak Capital said gold and silver are essential insurance. “But we don’t buy more insurance after the house has already been saved. The ‘screaming’ in the silver market is the signal that the exit door is getting crowded. It may be prudent to move your capital to an asset that builds wealth, not one that simply waits for a disaster,” it said.

Published on January 29, 2026