Why Gold Prices Are Rising Sharply: Will Gold Hit ₹2 Lakh per 10 gm Soon?

In India, the prices of gold keep soaring to greater heights due to the uncertainty in the world coupled with increasing ETF inflows and continuous central bank purchases. Over the last five years, the yellow metal has given tremendous returns, and there is once again the debate whether the 10 grams price would go to ₹2 lakh in the next five years.

The 24K gold (₹51,619 per 10 grams in September 2020) has surpassed 24K gold and topped 109,000 in the year 2025, according to MCX data, 24K gold has gained more than 112 per cent in the year 2025. Gold has increased by almost 50 percent in the past one year and this has been far better in comparison to major equity benchmark.

Why Gold Prices Are Rising

The sharp increase in gold has not only been caused by the global events but also by the economic indicators and the increasing investment pace.

1. Geopolitical Tensions that are Causing Safe-Haven Demand.

International unrest, especially the Russia-Ukraine conflict, and the trade disruptions have made investors in the international system inclined towards investing in safe-haven currencies like gold. That is the best cause of gold price increase.

2. Fears about the US Economic Stagnation and deindustrialization.

It is the fear that the United States of America economy will either enter a slow down or will experience stagflation and this has increased the attractiveness of gold that affects international and local prices.

3. Low-Performance of Equity Markets.

As the Nifty 50 has produced its subdued returns within the last year, the securities that are seen to have done well in times of volatile economic conditions have been the favored investors.

4. Powerful Global and Domestic ETF Flows.

Gold ETFs traded in the US have since increased to more than 215 billion. The inflows of gold ETFs are also high in India in 2025, contributing to the general demand.

5. Gold Reserves Growing by Central Banks.

Asia, Middle East and Europe central banks also carry on increasing their gold reserves, generating long term demand of the metal.

6. Anticipations of Federal Reserve Cuts in the US.

US Federal Reserve expected interest rate reductions has weakened the dollar outlook, a trend which is usually associated with increased gold prices in the world market.

Historical Price Trend

The long term performance of Gold is also strong. The metal has increased over 50/ in the last one year. Its CAGR is more than 30 percent in three years and five-year, ten-year and twenty-year returns are in the range of double digits. According to MCX data provided by Anand Rathi Share and Stock Brokers, the resilience of gold in times of inflation, the geopolitical crisis and economic shocks is noted.

Will Gold Hit 2 lakh per 10 gm Within the next five years?

Gold is expected to record an increase in the medium-long term according to observers in the market. Domestic prices given by analysts are expected to be between ₹1.3 lakh per 10 grams (916 Gold) of domestic prices in the coming year. In the coming five years, it is estimated that gold will be between 250000 and 300000 per 10 grams depending on the amount of debt in the world, supply forces, how much the major economies reserve, geo-political challenges and the purchase of ETFs.

According to some experts, gold might even reach 3 lakh in terms of price per 10 grams in case of a rapid worsening of the situation in the world or some drastic geopolitical shocks. But these levels are considered as high-end possibilities and not as low-end projections.

Outlook

The positive trend in the price of gold can be attributed to the general uncertainty in the world and the movement of the investor mood and stable central buying. As geopolitical tensions and economic risks continue to exist, gold is likely to be a major investment in the world financial system. The future direction will be determined by the policies of central banks, the global growth trends and emerging geo political events.