Gold crosses Rs 1.1 lakh, silver at 13-yr peak: What it means for investors

For Indian investors, gold remains a portfolio hedge while silver offers dual exposure to safe-haven flows and industrial growth.

Gold prices in India surged to  Rs 1.10 lakh per 10 grams on Tuesday, aligning with international market trends. A report by Axis Mutual Fund notes that precious metals are shining brighter than ever in 2025, with gold prices hovering near record highs of $3,475/oz and silver at $40/oz, its strongest level in 13 years. Both metals have surged 35–45% year-on-year, outpacing most asset classes, as global investors rush toward safe havens amid economic uncertainty, a weaker U.S. dollar, and expectations of lower interest rates.

 

Why Gold Prices Are Rising

 

Weaker U.S. Dollar

 

The Dollar Index has slipped to 97.7, down from 110 in February 2025.

 

 

July’s U.S. non-farm payrolls disappointed, with only 73,000 jobs added vs 125,000 expected, sparking dollar weakness.

 

A weak dollar makes gold cheaper for investors holding other currencies.

 

(Sources: Bloomberg, Reuters, US Bureau of Labor Statistics)

 

Rate-Cut Expectations

 

U.S. inflation stood at 2.7% YoY in July, in line with forecasts.

 

Softer data has raised market bets on the Fed cutting rates by 60 bps by year-end, with an 80% chance of a September cut.

(Source: CME FedWatch, FactSet)

 

Safe-Haven Demand

 

Geopolitical tensions, trade wars, and U.S. political pressure on the Fed are driving safe-haven flows into gold.

 

Global Gold Demand Trends

 

Q2 2025 demand rose 3% YoY to 1,249 tonnes.

 

ETF inflows: 400 tonnes in H1 2025, driven by volatility.

 

Central banks: Net addition of 166 tonnes, diversifying away from the U.S. dollar.

 

Jewellery: Down 14% YoY at 357 tonnes, near 2020-pandemic lows, as buyers in India and China delayed purchases.

(Source: World Gold Council)

 

India: Demand Adapts to High Prices

 

Domestic gold crossed ₹100,000 per 10 grams this year.

 

Consumers engaged in profit-taking by selling old jewellery, waiting to re-enter if prices correct.

 

Authorities expanded hallmarking standards to include 9-carat gold (37% purity) to improve affordability.

(Sources: RBI, World Gold Council, Indian Bullion & Jewellers Association)

 

Silver’s Parallel Rally

 

Silver hit $40/oz, up 40–45% YoY, supported by both safe-haven buying and booming industrial use.

 

ETF inflows: Record 95 million ounces in H1 2025, taking total holdings to 1.13 billion ounces (~$40 bn).

 

Industrial demand:

 

680 million ounces in 2024 (record high), continuing strong in 2025.

 

Solar panel demand, EVs, and semiconductors driving consumption.

 

Futures positioning: Net long silver futures rose 163% since Dec 2024, signaling institutional bullishness.

(Sources: Silver Institute, Bloomberg, FactSet)

 

Supply remains constrained—less than 30% of silver comes from dedicated mines, with the rest a byproduct of gold and base metals. 

Outlook: What Investors Should Watch

 

Gold: Expected to trade in the $3,400–$3,600/oz range in 2025. A steep correction looks unlikely unless U.S. policy uncertainty clears or global trade tensions ease significantly.

 

Silver: Likely to remain in the $40–42/oz band, supported by industrial growth and investment flows.

 

Gold-silver ratio: At 88, close to post-COVID averages (~90) but above historic norms (65–70), suggesting silver may still have more upside.

 

(Sources: Axis MF Research, World Gold Council, Silver Institute) 

What is happening in India

 

• In India, retail profit-taking has happened - people selling old jewellery to cash in on high prices, with plans to buy back later if prices dip. However, physical demand will be clear in the next quarter as the festive season approaches. There's some worry in financial markets with a significant volatility in USDINR currency pair, which is helping to keep the gold

 afloat.

 

• The Indian market has also seen adaptation: gold in India crossed a psychological milestone of Rs 100,000 per 10 grams this year, prompting authorities to expand hallmarking standards to include 9-carat gold (37% purity) jewellery, down from the previous 14-carat minimum, to offer more affordable option.

 

Axis Mutual Fund view: 

The gold-silver ratio currently stands at 88, which is close to post covid average of ~90.; historic range (pre-COVID)  being 65-70. 

 

It expect gold prices to be in the range of 3400$ to 3600$/oz this year.  Gold prices are unlikely to see steep correction unless: 

• The US government stops criticizing the Federal Reserve or its members.

• There's a big breakthrough in solving global trade and tariff problems. So far, the government is dealing with trade issues one country at a time, instead of looking for broader solutions. This approach hasn't been very successful

 

Axis MF expects Silver to remain in range of 40$-42$/oz in this year. 

 

Investment Relevance of Gold and Silver in Current Conditions:

• Both metals have shown strong performance in 2025, supported by macroeconomic and geopolitical factors

 • Continued relevance of both metals in portfolio strategies, especially amid global uncertainties

 • Gold remains a preferred safe-haven asset, backed by central bank buying and ETF flows

 • Silver offers dual exposure: safe-haven and industrial growth (solar, electronics)