From Bullish Breakout to Big Gains: Is Gold Racing Toward ₹1.4 Lakh?

Gold prices have been on a phenomenal trajectory for quite some time now, and there seems to be no slowing down. Currently commanding a bullish position, many predict the metal to reach a staggering high of ₹1.4 lakh per 10 grams in the near future. The significant factors behind this surge are global demand, central bank buying, and a weakening rupee. Surprisingly, inflation or retail demand are not the forces driving the rally.

Global Trends Fueling the Rally

The shift has changed from high dependence on dollar to a strong confidence in gold across the world. Central banks worldwide are revising their reserve strategies. The geopolitical tensions have been on the rise, and the trust factor from US dollar system has been slowly declining leading to diversification of gold. Internationally, gold prices were hovering around $3,532 per ounce in early September, which was about 90% higher than in 2022. This surge is attributed to heavy central bank purchases and investor demand via ETFs.

In the first quarter of 2025 alone, the central bank purchases were 24% above the average five-year period. In the second quarter of 2025, demand in value terms skyrocketed 45% year-on-year to a record $132 billion. A significant portion was contributed by central banks, adding 166 tonnes to their reserves, and strong inflows into ETFs and bars/coins. Plu,s the Ukraine war further escalated the matter. The freezing of $300 billion of Russian reserves in 2022 made countries realize that their dollar assets could be treated as political weapons in the future. Hence, a majority of them turned towards gold as their insurance policy.

India’s Growing Investment Inflows

Indian households and institutions no longer consider gold as just a festive purchase. They are now focused on looking at gold as a serious portfolio allocation. The weaker rupee has amplified the effect. As per experts, the total gold consumption across India is expected to fall to a five-year low in the range of 600 and 700 tonnes in 2025, which is a sharp decline from over 800 tonnes in 2024. If the prevailing factors, such as domestic investor inflows into ETFs continue besides a weaker rupee, the day wouldn’t be far when gold prices reach ₹1.4 lakh per 10 grams.

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