Gold Rates Jump 3%: An All-Time High

Gold February futures jumped by over ₹4,100 (3%) to hit an all-time high of ₹1.54 lakh per 10 grams on the Multi Commodity Exchange (MCX).

Silver followed the rally, with MCX silver March futures rising by more than ₹2,800 (1%) to ₹3.26 lakh per kg during the morning session.

International markets also saw a sharp spike in bullion. US gold futures rose nearly 2% to $4,847.20 per troy ounce, reflecting the same risk-off sentiment playing out globally.

What is Driving Gold to Record Highs?

1. Geopolitical Reasons:

The immediate trigger is the growing risk of a trade war between the United States and the European Union (EU), one that could spill into global growth expectations and hit markets already nervous about geopolitics.

According to media reports, the European Parliament may soon announce a suspension of approval of the US trade deal agreed in July.

Adding further uncertainty, US President Donald Trump said he would not back down from his push to acquire Greenland.

The combination of trade conflict fears and geopolitical flashpoints has been enough to shake investor confidence globally, especially in equities and risk assets.

2. Tariffs

The US has also announced tariffs (10%) that directly impact eight European countries (Denmark, Norway, Sweden, France, Germany, the United Kingdom, the Netherlands, and Finland), effective 1 February, with a warning that rates could rise sharply to 25% from 1 June 2026.

Europe, meanwhile, is reportedly debating whether to activate its anti-coercion instrument, a trade defence mechanism meant to counter foreign economic pressure. The threat of tit-for-tat actions is keeping investors nervous, making them turn to safe-haven investments.

3. Demand and Supply

Another reason for the rally is that investment buying remains strong globally, even though jewellery demand is weakening at high prices.

The World Gold Council noted that the total gold demand went up to 1,313 tonnes (a 3% Year-on-Year rise; the highest quarterly total in its data series). In value terms, demand jumped 44% to a record $146 billion in Q3, mainly because prices were significantly higher.

The most important takeaway is where demand is coming from. WGC noted that investors remained the dominant force in Q3. ETF inflows reached 222 tonnes, while physical investment buying also stayed strong. Bar and coin demand came in at 316 tonnes, marking the fourth straight quarter above the 300-tonne level.

Meanwhile, Jewellery buying continued to fall. Jewellery consumption in Q3 dropped to 371 tonnes, marking a double-digit Year-on-Year decline for the sixth consecutive quarter, as high prices kept volumes under pressure.

4. Dollar Weakness

The US dollar has weakened, which is supportive for gold because bullion is priced in dollars. When the dollar falls, gold becomes cheaper for buyers holding other currencies, helping demand.

In India, the move has been magnified by rupee weakness, which tends to lift domestic gold prices even more sharply than global prices alone.

What Comes Next?

Gold’s record-breaking run is being powered by multiple factors at once: trade-war fears, political uncertainty, currency weakness, and strong global investor buying. For Indian markets, rupee depreciation is acting as an additional booster, keeping domestic prices at a premium.

The focus now shifts to whether gold can hold above the psychological ₹1.5 lakh mark without sharp profit booking. But as long as uncertainty stays high and investment flows remain strong, traders expect gold to stay well supported, even if volatility remains elevated.

Sources:

Mint Markets
Economic Times
CBS News