What Contributed to the Firm Gold Prices This Week?
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Synopsis
In a week marked by global market dynamics and festive demand, Indian gold prices have shown resilience. Despite a mid-week dip, the ongoing trade tariff uncertainties and a weakened dollar have kept investors engaged. Discover key insights on the fluctuations and future expectations for gold prices.
Key Takeaways
- Gold prices showed resilience despite mid-week fluctuations.
- Trade tariff uncertainties continue to impact market trends.
- Domestic demand remains strong during festive seasons.
- The rupee's weakness supports higher domestic gold prices.
- Gold is viewed as a critical asset in times of economic uncertainty.
Mumbai, Aug 9 (NationPress) This week, Indian bullion prices saw a slight increase, driven by international market trends and rising festive demand. Mid-week saw a notable decline, with the cost of 24-carat gold decreasing by Rs 91, but prices rebounded as the weekend approached.
Despite the temporary drop, gold remains influenced by ongoing trade tariff uncertainties and dollar weakness, which supports the overall trend. Analysts predict gold will trade within a volatile range of Rs 99,000 to Rs 1,01,500.
The price of 24-carat gold (10 grams) opened the week at Rs 1,00,167 on Monday, dipped to Rs 99,017 on Wednesday, and concluded at Rs 98,534, according to the India Bullion and Jewellers Association (IBJA).
“Gold prices have been volatile, with the weakening rupee bolstering domestic prices. The MCX Gold settled at Rs 1,01,180, gaining Rs 350, while Comex gold fluctuated around $3390 in a narrow band of $3380 to $3405. Moving forward, prices are expected to remain unstable due to Trump's tariff policies, particularly as the India deal seems unlikely for now. Any positive shifts in the rupee could curtail gold's upside,” stated Jateen Trivedi from LKP Securities.
According to a report by Bernstein, India's wealthiest households allocate nearly 60 percent of their financial assets in tangible assets such as real estate and gold.
Large trade and budget deficits are putting pressure on the US, jeopardizing the dollar's status as a reserve currency. Gold remains a viable alternative, drawing reserve flows. With global foreign exchange reserves at $12.5 trillion and India holding 15 percent of the $23 trillion global gold market, a mere 5 percent shift in global reserves towards gold could trigger a significant price increase, analysts believe.
The RBI has projected a CPI inflation of 3.1 percent for FY2025-26, attributed to consistent rainfall and robust kharif sowing, while food prices remain stable.
Adverse base effects and policy-induced demand could push CPI inflation beyond 4 percent by the conclusion of FY26. The rise in gold prices contributed to an increase in core inflation to 4.4 percent in June, up from 4.1-4.2 percent observed from February to May, according to the RBI.
–IANS
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Point of View
I believe that the current fluctuations in gold prices reflect a complex interplay of global economic dynamics and domestic demand. The importance of gold as a financial asset continues to grow, and understanding these trends is vital for both investors and policymakers in navigating the market's uncertainties.
NationPress
29/08/2025
Frequently Asked Questions
Why did gold prices increase this week?
Gold prices increased due to rising festive demand and global market trends, despite a mid-week dip.
What is the expected price range for gold?
Analysts predict gold will trade between Rs 99,000 and Rs 1,01,500.
How does the dollar's strength affect gold prices?
A weaker dollar typically supports higher gold prices, making it a more attractive investment.
What factors contribute to inflation in relation to gold?
Rising gold prices can push core inflation higher, affecting overall economic indicators.
What is the significance of gold in Indian households?
Many Indian households invest heavily in gold, viewing it as a stable and valuable asset.
