Gold prices in India hit fresh highs on Monday, September 22, as GST 2.0 came into effect. The price of 24-carat gold in Delhi reached Rs 11,258 per gram. For 10 grams, buyers now have to pay Rs 1,12,580, up from Rs 1,12,150 on Sunday. Silver also climbed to Rs 138 per gram, or Rs 1,38,000 per kilogram.
Gold prices have shot up compared to last year. In September 2024, 24-carat gold cost Rs 7,633 per gram. Today, it has surged by more than 45%. On the Multi Commodity Exchange (MCX), the spot price stands at Rs 1,09,388 for 10 grams, compared with Rs 73,000 a year ago.
Globally, gold is trading at $3,700 an ounce, almost double the price in September 2023.
Why are prices rising?
The surge is linked to global events and central bank policies. The Russia-Ukraine conflict and Middle East tensions drove investors to gold as a safe-haven asset. At the same time, the growing US debt burden weakened the dollar, pushing gold prices higher.
Central banks worldwide continue to buy gold in bulk. India’s reserves reached 880 tonnes by the end of August, making up 12.5% of foreign exchange reserves, up from 9% last year.
Another factor is the US Federal Reserve’s rate cut in September. While lower interest rates normally push money into stocks, gold remains attractive in times of uncertainty.
GST 2.0 has also played a role. The government kept the 3% GST on gold and silver jewellery but added 5% on making charges. Coins and bars still draw 3% GST. Traders say the announcement created a spike in domestic demand.
India is now the largest gold consumer in the world, overtaking China. Indian families are estimated to hold 24,000 tonnes of gold, more than the reserves of global central banks combined.
A third of annual sales come during weddings and festivals such as Dussehra and Diwali. With these events approaching, retailers expect demand to pick up despite high prices. The World Gold Council has already reported rising interest in physical gold, especially bars and coins, as buyers focus on investment.
Jewellery retailers say mid-range purchases between Rs 50,000 and Rs 1 lakh have slowed. But premium and luxury buyers continue to spend.
Market view
Market experts believe the gold rally is not over yet. Analysts at Way2Wealth Brokers say MCX gold is trading in a bullish zone. They see support near Rs 1,08,950 and resistance around Rs 1,09,900 to Rs 1,10,650.
Nirmal Bang Securities says both gold and silver are likely to stay firm in the short term. The firm expects prices to move slightly higher, supported by the Fed’s rate cuts and upcoming US inflation data.
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