Gold Price in India Soars to Record High Amid Global Safe-Haven Rush
SYDNEY, 29 January 2026 – Gold prices in India have skyrocketed to unprecedented levels, breaching ₹1.85 lakh per 10 grams as of 29 January, driven by a potent mix of global geopolitical instability, a weakening US dollar, and intense safe-haven demand. The surge, which saw prices jump 9% in a single session on Indian commodity exchanges, is casting a shadow over local jewellery demand for 2026 while simultaneously boosting the value of the nation’s strategic gold reserves.
Record-Breaking Rally
The bullish momentum for gold is a global phenomenon, with international spot prices smashing through the $5,300 per ounce barrier for the first time this week. This rally has translated directly into Indian markets, where prices for gold and silver have scaled fresh historic peaks. Analysts note that alongside geopolitical tensions, concerns over the independence of the US Federal Reserve and a broad loss of confidence in paper currencies are fuelling the flight to hard assets. The Indian rupee’s relative weakness against the dollar is further amplifying the local price rise.
Key Drivers & Market Impact
| Factor | Impact on Gold Price |
|---|---|
| Geopolitical & Economic Uncertainty | Primary driver of safe-haven demand, pushing investors globally towards gold. |
| Weakening US Dollar & Fed Policy | A softer dollar makes gold cheaper for other currency holders; rate cut expectations increase gold’s appeal. |
| Central Bank Purchases | Aggressive buying by central banks (e.g., China, India, Turkey) creates sustained structural demand. |
| Weak Indian Rupee (INR) | Amplifies the cost of dollar-denominated gold imports, raising local prices further. |
Contrasting Demand Picture in India
While investment demand for gold bars and coins remains robust, the record prices are severely dampening consumer appetite for jewellery. Industry projections indicate India’s overall gold demand is likely to fall in 2026, following an 11% decline in 2025. The jewellery sector, which traditionally accounts for the majority of Indian gold consumption, is bearing the brunt of the slowdown as consumers defer purchases. This has led to calls from industry experts for the government to consider raising the ₹2 lakh threshold for mandatory PAN/Aadhaar disclosure in the upcoming budget to ease transactional friction.
Forex Reserves Get a Golden Boost
In a related financial development, India’s foreign exchange reserves surged by $14.17 billion to reach $701.36 billion in the week ending 23 January – the largest weekly gain in over ten months. The Reserve Bank of India (RBI) reported that a significant portion of this increase, approximately $4.6 billion, came from a sharp rise in the valuation of its gold holdings amid the price rally. The RBI has been steadily accumulating gold, with reserves now valued at over $117 billion, underscoring the metal’s strategic role in national economic buffers.
Australian Market Correlation
The global gold frenzy has had a positive knock-on effect for Australian markets. The S&P/ASX 200 recently touched a 50-day high, led by strong rallies in mining and gold stocks. Australian gold producers are direct beneficiaries of higher US dollar-denominated prices, which improve margins and drive increased investment in exploration activities across the country.
Frequently Asked Questions
Why is gold price rising so sharply in India?
The price rise is driven by global factors: intense safe-haven demand due to geopolitical and economic uncertainty, a weakening US dollar, and sustained buying by central banks. In India, these high international prices are compounded by a relatively weak rupee, making imports more expensive.
Will gold demand in India increase in 2026?
Overall demand is projected to decrease in 2026, primarily due to a slump in jewellery sales caused by high prices. However, investment demand for bars and coins may remain resilient as investors seek a store of value.
How does this affect India’s economy?
The high prices increase the import bill for gold, putting pressure on the current account. Conversely, they have boosted the value of the RBI’s gold reserves, contributing to record-high foreign exchange reserves, which strengthen the country’s external financial position.