Gold continues its ascent worldwide as festival-driven demand collides with macroeconomic turbulence. Spot prices have broken past $4,300 an ounce, prompting Indian domestic rates to reach ₹1,31,699 per 10 grams and record premiums in key markets. HSBC, recalibrating its outlook, now forecasts average gold at $3,355 for 2025 and $3,950 for 2026, citing sustained safe-haven interest.
Buyers in India are shifting patterns: instead of heavy gold jewellery, many are opting for coins, bars or lighter designs valued for liquidity. This trend compounds a supply squeeze, elevating premiums to up to $25 over benchmark pricing — the highest premiums seen in over a decade.
Customs authorities report a sharp uptick in smuggling activity as high domestic margins push illicit gold entry. Smugglers evade import duties to reap gains exceeding ₹1.15 million per kilogram. Multiple interceptions at airports have been made by the Directorate of Revenue Intelligence.
Central banks and institutional actors are inflating the tailwinds behind the rally. Goldman Sachs suggests the current ascent echoes the 1970s spike driven by inflation and geopolitical shocks, though marked by “real demand” this time. The firm now envisions gold reaching $4,900 by December 2026.
While bullion demand swells, jewellery off-take shows signs of strain. The World Gold Council anticipates that 2025 jewellery consumption in India may fall to 700–800 tonnes, down from last year’s peak, as pricing curbs discretionary purchases. In contrast, investment demand—via ETFs, digital gold instruments, and physical coins and bars—is gaining traction.
In the UAE, where many Indian expatriates shop during Diwali, 24-karat gold has hit Dh523 per gram amid ongoing rate cut expectations and geopolitical uncertainty. Retailers report that, despite surging costs, demand remains robust — though consumers are moderating weight and deferring large purchases.
Geopolitics and monetary policy play a central role in the narrative. Anticipation of U. S. rate cuts, U. S.–China friction, and fiscal deficits are stirring capital flows into non-yielding assets like gold. At the same time, institutional buying has firmed the rally’s foundation. HSBC’s upgraded forecasts reflect conviction in this structural shift.
Analysts caution that short-term volatility and profit-taking could induce pullbacks. Yet fundamentals remain supportive: shrinking real yields, institutional and central bank accumulation, and resilient physical demand in key markets point toward continued momentum.
For now, Diwali 2025 is becoming a defining moment in gold markets — a convergence of faith, investment impulse and macro turbulence that is reshaping consumption and portfolio strategies across Asia and beyond.