Topic 5: BULLION : BATTLE STAR

In May 2025, India’s bullion market exhibited a mix of volatility and strength, ultimately closing the month on a positive note. Gold prices fluctuated but showed a general upward trend, with 24K gold priced around ₹9,599 per gram on May 28, dropping slightly to ₹9,544 on May 30 before climbing to ₹9,764 by June 2. This late surge reflected heightened investor interest and safe-haven demand triggered by global tensions. Silver prices moved similarly, ranging between ₹99,000 and ₹100,000 per kilogram, eventually reaching ₹100 per gram by early June, in response to both global cues and domestic demand. One of the most influential drivers of bullion prices was increased geopolitical uncertainty. The continuation of the Ukraine-Russia war and rising US-China trade tensions unsettled financial markets and boosted global demand for gold and silver. This led to significant price gains in Indian markets, especially during the last week of May, as investors turned to bullion to hedge against growing economic risks. On the monetary front, anticipation of US inflation data and potential Federal Reserve rate hikes added to global market anxiety. A stronger US dollar, driven by higher US yields and safe-haven demand, led to short-term price corrections in Indian gold. For instance, 24K gold dropped ₹44 per gram on May 29. Despite this, gold prices rebounded quickly, supported by the Reserve Bank of India’s cautious monetary stance, which provided some stability. Historically, policy uncertainty tends to strengthen gold’s appeal in India, as investors seek protection from volatile macroeconomic signals. On the domestic front, a stronger Indian rupee helped soften the impact of global price fluctuations. While the rupee’s appreciation dampened some of the price rises, it wasn’t enough to fully offset the bullish trend driven by global demand. Seasonal factors also played a role—particularly the Akshaya Tritiya festival on April 30, which traditionally sees strong gold buying. Although jewellery demand was muted due to high and unstable prices, bars, coins, and digital gold saw increased interest, particularly in culturally significant regions like South India. From an investment perspective, gold ETFs saw redemptions as some investors booked profits, yet overall participation remained strong. Imports stayed resilient, and with no major government policy changes in May, global factors remained the dominant market drivers. Overall, Indian bullion in May 2025 reflected its role as a safe-haven asset, finishing the month with a clear upward bias driven by global uncertainty and cultural demand.



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