Imagine gold prices skyrocketing to jaw-dropping heights, potentially hitting $4,500 per ounce – and the surge might not be stopping anytime soon, fueled largely by insatiable demand from Asia. That's the eye-opening prediction from a recent report by Motilal Oswal Financial Services Ltd (MOFSL), and it's got investors on edge. But here's where it gets controversial: Is this a smart bet on safety in turbulent times, or just another bubble waiting to burst? Let's unpack this together, step by step, so even if you're new to commodities trading, you can follow along easily.
Gold's journey in 2025 has been nothing short of spectacular, with prices climbing over 50% year-to-date. They've already leaped past the $4,000 per ounce barrier and shattered more than 35 all-time highs this year alone. What’s driving this momentum? A mix of factors, including ongoing buys by central banks around the world, shaky geopolitical situations that keep everyone guessing, and a booming appetite for gold in Asian markets. Experts point to broader economic shifts too, like worries about government spending, a softening US dollar, and central banks actively diversifying their reserves away from traditional assets. As Manav Modi, an Analyst for Commodities & Currencies at MOFSL, put it in a quote shared by PTI, 'Gold's impressive rally is a result of various macroeconomic shifts, including fiscal uncertainties, a weaker dollar, and strategic diversification by central banks. Asia is becoming the focal point of this new monetary alignment.'
To put this in simple terms for beginners, think of gold as a global safety net – when the world feels uncertain, people flock to it because it holds value better than many other investments. And with expectations of interest rate cuts from the US Federal Reserve, which could make holding gold even more attractive compared to lower-yielding bonds, the trend seems set to continue.
Now, zooming in on India, a major player in this story, gold recently traded at around Rs 1.20 lakh for every 10 grams. In the longer run, assuming the USD-INR exchange rate stabilizes at about 89, prices could climb as high as Rs 1.35 lakh per 10 grams. This upward push is getting extra support from a weaker US dollar index, which makes gold cheaper for buyers using stronger rupees. Meanwhile, central banks worldwide scooped up nearly 600 tonnes of gold in the first nine months of 2025 – that's a record pace. On top of that, global gold exchange-traded funds (ETFs) saw massive inflows of 450 tonnes, matching the highest levels since 2020. For those unfamiliar, ETFs are like baskets of gold that you can invest in without physically owning the metal, making it easier for everyday people to join the rally.
And this is the part most people miss: Silver is actually stealing the spotlight this year, outperforming gold with a stunning 60% gain year-to-date. Analysts expect it to hit around $75 per ounce soon, with domestic prices in India potentially rising to Rs 2.3 lakh per kilogram. Unlike gold's role as a safe-haven, silver's climb is powered by its practical uses in industries – imagine it in solar panels for renewable energy, electric vehicle batteries for eco-friendly cars, or even hardware for artificial intelligence gadgets. A persistent gap between supply and demand is fueling this, as global mines aren't producing enough to keep up. 'Central bank diversification is reshaping the bullion market. Institutional demand and sovereign accumulation are now aligned with long-term value creation,' explains Navneet Damani, Head of Research for Commodities & Currencies at MOFSL. To clarify, 'bullion' just means precious metals like gold and silver in bulk form, and this shift shows how governments are betting big on them for stability.
Adding to the mix are broader concerns, like ongoing worries about US government finances and weakening labor market data, which are pushing more people toward 'safe-haven' assets that don't crumble in crises. On the supply side, things are tight – mine output worldwide is stagnant, the quality of ore is dropping (meaning less gold per ton mined), and stricter environmental rules are making it harder and more expensive to extract these metals. India, as one of the planet's biggest consumers, imported about 300 tonnes of gold and a whopping 3,000 tonnes of silver by September 2025, showing no signs of slowing down. Interestingly, the gold-silver ratio – a simple way to compare their prices – has shrunk to 81-82 from 110 earlier this year, underscoring silver's relative strength. As an example, if gold costs $100 per ounce and the ratio is 100, silver would be $1 per ounce; a lower ratio means silver is gaining ground.
Looking ahead, MOFSL predicts robust demand for gold in India during the upcoming Diwali festival, when families traditionally buy jewelry and gifts. Cultural traditions play a big role here, and with more disposable income in households, it's a perfect storm for higher prices. Historically, gold prices have gone up in seven out of the last ten Diwali seasons – a pattern that could repeat. Despite possible short-term dips or corrections (like temporary price drops due to market overreactions), the long-term view for both metals remains bullish. That said, here's a controversial twist: Some critics argue that relying so heavily on gold as a hedge against inflation or uncertainty could backfire if global economies stabilize faster than expected, leaving investors with overpriced assets. Is gold the ultimate safe bet, or are we overlooking risks like supply chain disruptions from climate policies? What do you think – should central banks keep piling into gold, or is this just a fad driven by fear? Share your opinions in the comments; I'd love to hear agreements, disagreements, or even your own investment stories!
(Disclaimer: The recommendations and views on asset classes expressed by experts are their own and do not represent the views of The Times of India.)
