Safe-haven demand lifts gold to all-time highs; Analysts see further upside on macro tailwinds

New Delhi [India], December 24 : Gold prices extended their historic rally on global and domestic markets, buoyed by a weakening U.S. dollar, persistent geopolitical tensions and sustained inflows into gold-backed exchange-traded funds (ETFs), reinforcing the metal's role as a preferred safe-haven asset amid mounting economic uncertainty.

In international markets, spot gold surged past $4,500 per ounce, while domestic prices climbed above Rs 1,40,500 per 10 grams, marking fresh record highs. Gold prices in 2025 are on track for their strongest annual gain since 1979, with an increase of around 70%.

Analysts said the rally reflects a confluence of macroeconomic and geopolitical factors that continue to reshape investor behaviour.

They believed that a weaker US dollar as well as escalating geo-political tensions are being reflected in the continuous surge in the prices.

High demand from investors, particularly through gold exchange-traded funds (ETFs) and physical bar and coin purchases, has further fueled the price surge.

Pranav Mer, Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd said, "The U.S. dollar index remained under selling-pressure and is trading below 97.70. Gold ETFs saw yet another net inflow last week with a marginal addition of net 3.1 tons. On the geo-political front, escalating tensions between U.S.-Venezuela, and likely re-escalation in the Iran-Israel tensions and slow progress in Russia-Ukraine peace talks."

"We maintain positive outlook on Gold with strong Support at Rs 1,35,200/ 1,33,000, with upside potential of Rs 1,48,000-1,50,000 by next quarter," he said.

Echoing similar optimism, Hareesh V, Head of Commodity Research at Geojit Investments Limited, said the historic rally underscores gold's importance as a portfolio stabiliser.

"Expectations of multiple US Fed rate cuts next year renewed the appeal of non-yielding assets like gold. Similarly, escalating geopolitical tensions have driven sharp safe haven demand, with bullion increasingly viewed as portfolio diversifier. Persistent central bank buying, robust inflows into gold backed ETFs and a weak US dollar further boosted its demand, cementing its role as a cornerstone asset in an era of policy and economic uncertainties."

From a longer-term perspective, Kaveri More, Commodity Analyst at Choice Broking, highlighted that the current bull run has surpassed all previous rallies

"Gold's journey to this milestone traces back to its 1979 peak adjusted for inflation, but 2025 eclipses all prior bull markets with a +70% gain from January lows around $2,800. Earlier breakthroughs like USD 4,000 in October built momentum, fuelled by post-pandemic recovery and escalating global risks, outpacing the 2020 rally. This positions gold as the top-performing asset class this year, drawing comparisons to crisis-era surges."

A sharp decline in the US dollar, down nearly 11% in 2025, has made gold more attractive to international buyers, especially amid renewed trade frictions and tariff policies.

"Central banks, especially China with over 1,000 tonnes added to reserves, are hedging against de-dollarization from sanctions and geopolitical shifts. Persistent inflation above 3% globally and delayed Federal Reserve rate cuts have eroded bond yields, pushing investors toward gold's safe-haven appeal during Middle East and Ukraine conflicts," Kaveri More said.

Currently Gold Future trading above USD 4,500 after ranging from USD 4,435 after breakout to USD 4,530, with volume at 76,960 contracts indicating strong participation.

"Key support rests at the 20-day moving average of USD 4,300 to USD 4200, while resistance eyes USD 4,900 to USD 5000 year-end targets, momentum favors upside if volumes sustain above averages."

This rally highlights gold's role as a gauge of economic uncertainty, with forecasts reaching USD 5,000 by mid-2026 barring dollar rebounds or de-escalations. Should monitor central bank flows and Fed signals for continued volatility," More said.

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