Gold was hovering around Rs 1.40 lakh for about 3 months, but suddenly in August the price started increasing. The prices increased by Rs 20 thousand in just 3 weeks. On August 24, 10 grams of gold is being sold for Rs 1 lakh 62 thousand.
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Why did gold suddenly start rising after a lull, how long will this rise continue and would it be the right decision to buy now? Answers to these questions in today’s explainer…
Question-1: Why have gold prices started increasing in August?
answer: There are 4 big reasons… 1. Weakening of the dollar
- In the world market, gold is mostly bought and sold in US dollars. That’s why the dollar and gold have a close, but inverse relationship. If the dollar is strong, then gold becomes cheaper and if the dollar is weak, then gold becomes expensive.
- The dollar index has fallen 2.5% in the last 1 month. This index is made up of 6 major currencies of the world – Euro, Japanese Yen, Pound, Canadian Dollar, Swedish Krona and Swiss Franc. The US dollar weakened against these. Therefore gold prices started increasing.
2. Expectation of lower profits on US bonds
- The US government issues government bonds to raise money from the people. Those who buy it get interest, the rates of which keep changing by the government. It is one of the most invested assets in the world.
- Whenever the bond yield, i.e. the interest rate, is lower than the rising price of gold, investors start withdrawing money from bonds and investing it in gold.
- On August 19, when the US Finance Department announced that they would buy back double the amount of their long-term government bonds from the market. The US Federal Reserve is also expected to reduce interest rates. Investors immediately shifted to gold, so prices skyrocketed.
3. Central banks around the world are continuously buying gold.
- The maximum trade in the world is in two things – gold and dollar. In the last few years, investors’ confidence in the dollar has decreased. To reduce the dominance of the dollar, all the central banks of the world are increasing the share of gold in their foreign exchange reserves, that is, they are continuously buying gold. Some have accumulated gold reserves at record levels.
- According to the World Gold Council, on an average, central banks around the world are buying more than one thousand tons of pure gold every year. In April-June 2026, Central Banks bought a total of 289 tonnes of gold.
- When central banks continue such purchases, gold prices rise in the market.
4. Changing purchasing patterns in the domestic market
In June, India had bought about 20 tonnes of gold from abroad, which has increased to about 45 tonnes in July, i.e. doubled. The reason for this is that three parts of the Indian market are now active simultaneously.
- Due to the ongoing boom since last year, people had postponed purchasing jewellery, but they have started buying gold again.
- Due to the festive season, bullion traders are replenishing stocks and jewelery makers are getting more orders.
- Due to the rise in gold, investors are also continuously investing money in gold ETFs, ingots and coins to make profits.
Question-2: Can gold prices increase further?
answer: At present the price of gold in the global market is around $ 4,600 per ounce. In July, according to the estimates and analysis of experts by international banking companies, the price of gold may increase by 10% by December 2026…
- JP Morgan Global Research: By December 2026, the average price of gold could be $4,500. That means no significant increase is expected from the current price.
- Goldman Sachs: By the end of 2026, the price of gold may reach $4,900.
- UBS Group: The price of gold is expected to reach $5,000 by the beginning of 2027.
- Morgan Stanley: Gold may touch the $5,000 mark early next year.
Ajay Kedia, founder of investment advisory company Kedia Advisory, estimates that by December the price of gold in the international market will cross $5,000. Due to this, the price of gold in India can go up to Rs 1.75 lakh to Rs 1.80 lakh per 10 grams.
Rohit Srivastava, founder of stock market analysis company Strike Money and India Charts, says, ‘Gold may swing between Rs 1.35 lakh to Rs 1.75 lakh per 10 grams in the coming one year.’
Question-3: What trend is visible in the prices of silver?
answer: The price of silver goes up and down more rapidly than that of gold. Look at this trend…
- The main reason for increasing silver prices is industrial demand. It is used in making electric vehicles, solar panels, AI data centers and microchips. Apart from this, due to rising prices of gold, demand for silver in jewelery has also increased.
- Ajay Kedia explains that there is a scale to estimate the price of silver – Gold Silver Ratio. It tells how many grams of silver can be purchased for the price of one gram of gold. It should be between 60 to 70. When this ratio decreases, then purchases of silver start increasing. Right now silver has come down from 70 to around 60. Therefore, silver prices will increase further.
- According to Ajay Kedia, by the end of the year, silver can reach near $ 90 per ounce in the international market. It’s $69 right now. Due to this, silver can go up to Rs 3.25 to 3.50 lakh per kg in the Indian market.
Question-4: So should we buy gold and silver now?
answer: Experts believe that gold and silver prices will remain volatile in the short term, but can still be purchased for long term investment.
According to Rohit Srivastava, ‘If you can keep investing for 3 years, then buying gold at every fall would be a good strategy. The price of silver will also increase along with the price of gold.
According to Ajay Kedia, ‘Looking at the trend of silver, it seems that it will increase faster than gold. If you can invest for a long period, then you must buy gold and silver now. In the coming 3 years, the price of gold can go up to Rs 2.75 to Rs 3 lakh per 10 grams.
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Disclaimer: This story is written for educational purposes only. Our advice to investors is that before taking any decision related to investment, they must consult experts at their level.
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