With gold prices surpassing returns generated by high-risk assets such as equities since last Akshaya Tritiya, investors are contemplating whether the yellow metal will continue to outperform in future.
Gold purchases made on Akshaya Tritiya are regarded as auspicious, believed to bring luck and success in material matters. This is why it ranks as the largest gold buying day in India, along with Dhanteras.
Domestic prices reached an all-time high on April 22, and even breached the psychological Rs 1 lakh per 10 gram level. Compared to last Akshaya Tritiya on May 10, 2024, when gold was hovering at around Rs 72,000, this year it was around Rs 95,000 on April 25, delivering more than 30 percent returns in less than a year.
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Are the underlying factors supportive enough to drive gold prices even higher?
Impact on physical demand
This year has been significant for gold, with global prices increasing 25 percent since January and reaching a record high of $3,500 per ounce in international markets.
Gold’s status as a safe haven is at an all-time high, and it is expected that Indians will continue to purchase it this Akshaya Tritiya regardless of prices.
“Industry feedback suggests strong buyer interest in various forms of gold, including higher carat gold jewellery, gold ETFs, digital gold, and coins and bars, further solidifying its role in Indian households. With seasonal and wedding-related demand being key, robust gold purchasing is expected this festive season,” said Sachin Jain, Regional CEO, India, World Gold Council, in a recent note.
However, there are concerns that higher prices may play spoilsport.
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In the meantime, gold has come down sharply from the Rs 1 lakh level to Rs ~95,000 in the past few sessions.
Domestic spot gold price as per MCX was at the Rs 94,600 per 10 gm level as of April 28.
“The recent decline appears to be a healthy correction as we have been in an extended rally. However, jewellers are concerned that if prices hover around Rs 1 lakh before Akshaya Tritiya, demand may fall by 40–45 percent,” said Trivesh D, Chief Operating Officer, Tradejini.
Trivesh feels that jewellers will try to mitigate this drop by providing different options, including lightweight jewellery, gold exchange, and advance booking schemes.
Factors at play
Gold prices are largely influenced by the US, where a lot has been happening since President Donald Trump returned to the White House.
After announcing tariffs and delaying them multiple times just before they were set to take effect, and initiating a trade war with its biggest trade partner, China, Trump has led the world into a situation where uncertainty is at its peak.
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“The dollar index has been declining for quite some time now, losing over 9 percent since the beginning of this year as assets flee US shores on account of uncertain policymaking triggering a trust deficit, benefitting gold,” said Chirag Mehta, Chief Investment Officer, Quantum Mutual Fund.
Looking ahead, prices of the yellow metal in the near-term will remain highly sensitive to developments in the ongoing trade war.
According to Vikram Dhawan, Head of Commodities and Fund Manager at Nippon India Mutual Fund, while higher prices could dampen jewellery sales in China and India — which together account for about half the global demand — central bank purchases are on track to deliver another record year.
“Despite record inflows year-to-date in 2025, ETF (exchange-traded fund) holdings are still roughly 20 percent below their Covid peak. This suggests that this could be a pivotal year when ETF flows and physical demand significantly influence prices. In the longer term, factors like de-dollarisation and the risk of unsustainable global debt levels highlight the role of gold as an important asset to navigate the evolving global landscape," said Dhawan.
What’s the outlook?
Technical analysis suggests that there is still much steam in gold despite handsome rallies in the past four years.
“The SPX 500-to-gold ratio — a powerful indicator of equity market dominance versus hard assets — has recently broken below its 10-year moving average. This event is not just rare; it’s historic. In the last 50 years, such a breakdown has occurred only thrice. And each time, it marked the beginning of a major bull run in gold,” said Apurva Sheth, Head of Market Perspectives & Research, SAMCO Securities.
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Fundamentally, gold remains a key portfolio stabiliser amid economic uncertainty.
“We expect gold prices to remain resilient. While short-term corrections are possible, the overall outlook stays bullish due to ongoing geopolitical tensions and cautious investor sentiment. For consumers, gold continues to offer both emotional and financial value,” said Aksha Kamboj, Vice President, India Bullion & Jewellers Association (IBJA) and Executive Chairperson, Aspect Global Ventures.
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