Why gold prices keep increasing in India

How much have gold prices risen in India?

Gold prices in India have seen a sharp increase, especially in the last few years. Here’s a table showing gold price fluctuations in the last 5 years: 1

8 reasons why gold price is rising in India

The price of gold in India is rising due to a mix of both international and domestic factors. Let’s take a look at eight reasons that drive gold prices to rise in India.

Global geopolitical tensions push investors into gold

Global conflicts and geopolitical tensions are primary reasons why gold price is increasing. They tend to increase uncertainty in the financial market. As a result, investors often shift to gold as a haven investment that eventually leads to a rise in prices. Since India is a major importer of gold, the gold prices are hit domestically as well.

Central banks worldwide are aggressively buying gold

Central banks also boost gold prices in India by aggressively increasing their gold reserves. This step is particularly taken to drive away the appeal of the US dollar and diversify bank reserves. This restricts the supply of gold in the market and pushes the price to rise.

Additionally, central bank buying also acts as a safety net. Even when macro-economic pressures (such as rising interest rates) cause other investors to sell, central bank buying creates a "floor" that prevents the price from crashing and pushes it higher.

Rupee depreciation makes gold more expensive in India

Gold is priced globally in US dollars, and when the Indian rupee becomes weaker, the import cost increases, pushing the gold prices to rise in India. Even in situations when global prices are stable, domestic prices can increase if the rupee continues to depreciate.

Inflation and low interest rates boost gold demand

Inflation is one of the primary reasons why gold rate is increasing. Every time inflation rises, the purchasing power of money declines, prompting investors to put their money in gold to preserve their wealth. On the other hand, when interest rates are low or negative, returns from fixed investments become less attractive, and investments become more attractive.

India’s massive domestic demand: culture, festivals, and weddings

In India, gold is not just an investment option; rather, it holds strong cultural and emotional value. Every year, there are record-breaking demands for gold during festive seasons like Diwali and Akshaya Tritiya or around weddings. The seasonal demand spike pushes the price upward.

Import duties, GST, and government taxes add to Indian gold prices

The role of government policies also has a huge impact on gold prices in India. For instance:

• Since India imports a large quantity of gold, any increase in import duty can lead to a rise in price.
• Purchasing gold in India attracts an additional 3% for the GST on the final price.

Limited global gold supply against surging demand

One thing about gold we all know is that it is a precious and rare metal. Gold mining is not only slow but also expensive. Due to the limited supply and soaring global demand for gold, prices are expected to increase.

Rise of digital gold, ETFs, and SGB investments

Unlike olden times, today, gold investment does not only mean purchasing physical gold. Investing platforms provide easy access to other forms of gold investments, such as digital gold, ETFs, and SGB investments, attracting more investors. As more investors enter the market, gold prices increase due to pressure.

Will gold prices continue to rise in India?

According to experts, gold prices are likely to continue to rise, especially due to their sustained demand as a safe haven investment, amidst the ongoing global uncertainties. Here are some major factors that may drive gold prices to rise: 2

Continued geopolitical tensions

If disputes between major countries continue, investors are more likely to buy gold to keep their wealth safe. As a result, gold prices will keep surging higher.

Interest rate cuts

If central banks keep interest rates low or cut them further, investors are likely to find gold more attractive.

Proposed tariffs

According to experts, gold prices reached a record high in 2025 primarily because of tariff announcements from the US government and the overall global policy uncertainty. If such tariffs are to continue, cool prices are likely to increase in India.3

Dollar weakening

A simple rule of gold prices is that when the US dollar gets weaker, gold usually gets more expensive in India. Since many countries are aiming to use fewer dollars in 2026, the demand for gold as an alternative will skyrocket, making the prices higher.

According to a survey, gold prices reached $5101.34 as of 26th January, 2026, primarily because of the weakening US dollar.3

However, these are predictions based on the ongoing global and domestic conditions. Any shift in the current situation can lead to price fluctuation in either direction.

Additional Info: According to experts, gold prices in India can hit even ₹1.7 lakh to ₹1.9 lakh per 10 grams for 24 carat gold in 2026.2

Conclusion

Gold prices in India have witnessed a significant rise over the years, driven by a combination of global and domestic factors such as inflation, geopolitical tensions, currency fluctuations, and strong cultural demand. While short-term movements may remain volatile, the long-term outlook for gold continues to be positive.

As both a safe-haven asset and a hedge against inflation, gold is likely to remain an important part of investment portfolios in India, supporting sustained demand and price growth.