The gleam of Diwali have dimmed, but the sparkle of gold continues to dominate the market among investors and even households. Even after the festive buying rush, a key question stays awakened, will gold prices cool down now, or is another rise on the landscape?
Gold prices had fallen on Tuesday, 21 October on Diwali as the dollar rose and investors booked profits after expectations of US interest rate cuts and sustained safe-haven demand drove gold to a fresh record high in the previous session. Spot gold was down 5.5% to a one-week low of $4,115.83 per ounce.
However, Global financial institution HSBC has released a report indicating that gold’s upward trajectory is unlikely to slow down anytime soon. The Indian gold market was closed on Tuesday, 21st October on account of Diwali. On Monday, gold at the retail market was trading at Rs 1,27,633 per 10 gm.
The retail price of gold was Rs 1,31,461 per 10 gm, with a 3 percent goods and services tax (GST). Monday saw a correction in the price of gold from its peak of Rs 1.34 lakh per 10 gm (with GST) on Dhanteras, which lasted for two days this year on October 18 and 19. This holiday season, there has been a robust demand for gold. A continuous interest in physical gold has been fueled by the historic gold surge, which has attracted the attention of investors.
Why is gold price on rise?
This rally is a result of multiple things. Global central banks are increasing their gold reserves, gold-backed exchange-traded funds (ETFs) are seeing an increase in investment, and there are growing anticipation that US interest rates will be lowered, according to a TOI article. Gold's appeal as a safe-haven asset has been further bolstered by the uncertainty associated with international trade disputes. Spot gold recently climbed beyond $4,300 per ounce, marking one of its fastest weekly rises since December 2008. HSBC predicts that prices will probably stay high until the beginning of 2026, though there might be a slight adjustment in the second half of that year.