DC Edit | Gold Prices: Stability Needed

Congratulations to Indian women, whose native ingenuity in financial management has once again been demonstrated to the world. Gold has long been an object of envy and has triggered many battles over millennia. But in the last few decades, investment gurus have derided it as a dead investment. However, Indian women continued their bets on gold, which have now paid off, with the price of the yellow metal crossing Rs 1,00,000 per 10 grams.

The gold price remained largely stable until 2020 at Rs 40,000. From Rs 10,000 in 2006 to Rs 40,000 in 2020, the price rose by 10.41 per cent annually. However, since the onset of the Covid pandemic in 2020, gold has outperformed almost every other asset class. It took five years — from January 2020 to January 2025 — to add another Rs 40,000. This period was marked by global conflicts, such as the Russia-Ukraine war and the West Asian crisis. The election of Donald Trump as the US President and his actions have created unprecedented uncertainty in the world, making gold almost the only safe haven.

The rise in the gold price, nevertheless, has been mainly driven by fear and, therefore, may not be sustainable. The latest available production cost for gold is $1,456 per ounce (28.35 grams), or Rs 43,748.40 per 10 grams. However, it is currently selling at a 128 per cent premium to its cost at Rs 1,00,000, which is unsustainable in the long run.

Gold is merely an investment avenue for the superrich investors in the West, who are parking billions of dollars in gold, driving its price up to the stratosphere. For Indians, however, it is an invariable part of their lives, from birth to death, and such a high price is unsettling. For the greater good of the world, and Indians, therefore, let us hope that peace returns and makes the yellow metal relatively more affordable.