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

India’s gold demand declined by 11% in 2025 and is expected to be around 700 tonnes this year, weighed down by record-high prices and changing consumer buying patterns, the World Gold Council (WGC) said in a report on Thursday.

Overall gold demand in India fell 11 per cent to 710.9 tonne in 2025 and is expected to be between 600 and 700 tonne in 2026, according to the WGC’s Full-Year 2025 Gold Demand Trends report.

In 2024, the overall gold demand stood at 802.8 tonnes.

However, in value terms, skyrocketing prices boosted demand by 30 per cent to ₹7,51,490 crore, compared to ₹5,75,930 crore in the previous year.

“India’s gold market in Q4 2025 clearly reflected the dual impact of record-high prices and shifting consumer behaviour. Total gold demand for the quarter stood at 241.3 tonne, marking a 9 per cent decline compared to Q4 2024.

“However, this moderation in volume was more than offset by a sharp rise in value, with overall gold demand increasing 49 per cent year-on-year to approx. ₹303,470 crore,” WGC Regional CEO, India, Sachin Jain told PTI.

The average gold price on January 1, 2025, rose by 67 per cent to ₹1,01,572 per 10 grams in 2025, compared to ₹70,754 in January 2024.

Demand for gold in India for the October-December quarter declined by 9 per cent at 241.3 tonne as compared to 265.8 tonne in the corresponding period of the previous year.

However, demand value surged by 49 per cent to ₹3,03,470 crore from ₹2,03,070 crore in the same period of 2024.

Total Jewelery demand in India for the whole of 2025 decreased by 24 per cent to 430.5 tonnes compared to 563.4 tonnes in 2024.

The value of jewelery demand increased by 12 per cent at ₹4,54,390 crore, compared to ₹4,04,510 crore recorded in 2024.

“Despite the wedding season, jewelery volumes dropped by 23 per cent to 145.3 tonne as record-high prices and affordability pressures weighed on consumption. This volume-value divergence mirrors 2025’s exceptional price rally, with gold delivering over 60 per cent returns and 53 all-time highs,” Jain said.

In contrast, investment demand emerged as a clear bright spot during the quarter. Total investment demand rose 26 per cent year-on-year to 96 tonne, while its value more than doubled to ₹120,700 crore, up 108 per cent compared to the fourth quarter (Q4) 2024, he said.

“This strong performance highlights a growing strategic commitment among Indian investors to gold as a long-term portfolio hedge,” added Jain.

On the supply side, gold imports during Q4 2025 stood at 215.1 tonne, marginally lower by 5 per cent compared to the same period last year.

Gold imports, which are usually in line with demand, dipped 17 per cent to 663.7 tonnes in 2025, as compared to 801 tonnes in the previous year, he said.

Recycling activity declined more sharply, down 27 per cent to 21.7 tonne, suggesting that consumers are choosing to retain their gold holdings despite record prices, Jain said, adding that this behavior further reinforces gold’s role as a trusted store of wealth, especially during periods of economic and market uncertainty.

“Overall, 2025 demand in volume terms was just lower by 11 per cent to 710.9 tonne, but in contrast, value-wise the demand was up by a massive 30 per cent to ₹7,51,490 crore in comparison to 2024,” he stated.

Meanwhile, according to WGC data, the Reserve Bank of India (RBI) added 4 tonne of gold to its reserves compared to 73 tonne in 2024.

Looking ahead to 2026, he said WGC expects Indian gold demand to be around 600-700 tonne as gold is well positioned to continue benefiting from persistent global uncertainties, a potentially softer interest rate environment, and sustained diversification efforts by global central banks.

“At the same time, we expect investment demand to remain robust, driven by increasing awareness of gold’s portfolio benefits and a growing appetite for ETFs and digital gold as reliable hedges against volatility,” he added.

Published on January 29, 2026