The demand for gold has risen by 5% on year in India from 2023 to 2024.
Gold has been the top-performing asset in 2025. Statistically, gold has been rising over 40% in the last year and over 10% this year. As of April 2025, it has surpassed the returns provided by Nifty50 by more than 45%, since 2023. This has led to one question – why is gold price rising?
Now, this increase in Gold’s demand and price has not happened miraculously. There are several factors that are driving this price surge, and today we will discuss them in our blog.
Trump’s Tariffs
The Trump administration has put tariffs from April 2025 on several countries, starting a tariff war with some.
This is causing uncertainty in global trade leading to increased appeal for gold as a safe-haven asset. If trade tensions further escalate, the Federal Reserve of the US may cut rates further, weakening the dollar and boosting gold prices.
US Fed Rate Expectations
While the Fed has not cut rates in 2025, it did implement three consecutive cuts in late 2024, totalling 1%.
The most recent cut in December 2024 brought the federal funds rate to 4.25%-4.5%. The Fed is expected to cut rates further this year. Lower Interest rates typically make gold more attractive than the US dollar, and thus the demand could rise even further.
Reserve Bank Buying
Geopolitical tensions, including the Russia-Ukraine war, China-Taiwan conflicts, and the recent trade war have led central banks to buy a record 1,180 tonnes of gold in 2024.
With reciprocal tariffs imposed on India now, the Reserve Bank of India might get more gold, increasing its reserves.
Gold Repatriation
India and the US are moving gold back from international vaults, due to tariffs or financial restrictions.
India repatriated 200 metric tons from London, likely due to trade war concerns, which proved to be a correct measure, with the recent reciprocal tariffs imposed. This has strained London’s gold supply.
Post-Pandemic Demand
Gold demand hit a record 4,974 tonnes in 2024, driven by jewellery, technology, and investment.
This has pushed the total demand value to $382 billion and is not expected to reduce any time soon.
Conclusion
With so many crucial factors in play, it is much better to have a decent holding of gold in your portfolio. To know more about how you can buy gold, check out our blog “4 Ways to Invest in Gold”.
