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Gold prices in India saw a notable decline on May 12, 2025, following a period of heightened geopolitical tensions between India and Pakistan. The easing of these tensions, coupled with positive developments in global trade negotiations, has led to a decrease in demand for gold as a safe-haven asset.
Investors and consumers alike are observing these changes, which may influence their decisions in the precious metals market.
What's happening
As of today, the price of 24-carat gold in India has fallen to Rs 94,294 per 10 grams, a decrease of Rs 2,224 from the previous day's rate. Similarly, 22-carat gold is priced at Rs 86,500 per 10 grams, reflecting a downward trend.
Reasons behind the fall
Several factors contribute to the current decline in gold prices:
- Easing India-Pakistan tensions: The recent ceasefire between India and Pakistan has calmed investor nerves, reducing the demand for gold as a protective asset.
- Optimism in global trade talks: Positive developments in US-China trade negotiations have alleviated concerns about global economic stability, diminishing the appeal of gold as a safe-haven investment.
- Strengthening of the US dollar: A stronger US dollar makes gold more expensive for holders of other currencies, potentially decreasing international demand for the precious metal.
What does it mean for investors?
For investors holding gold, the recent price decline may prompt a reevaluation of their portfolios. While gold has traditionally been a hedge against economic and political uncertainties, the current market dynamics suggest that other assets might offer better returns.
That said, if you are keen on investing in gold, don't allocate more than 5-10 per cent of your portfolio to it.
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