Precious metals are shining brighter than ever in early 2026, with Indian investors witnessing a breathtaking rally. This week, gold surged by ₹12,717 to ₹1,54,310 per 10 grams, while silver skyrocketed by ₹35,815 to ₹3,17,705 per kilogram. This isn't a fleeting spike but part of a sustained surge, with silver having risen an astonishing 167% in 2025.
The rally is a global phenomenon, with international gold prices breaching the $5,000-per-ounce psychological mark. But for Indian households and investors, the story is uniquely shaped by local dynamics, from a weakening rupee to robust festival demand.
Why Are Prices Soaring? Three Key Drivers
The meteoric rise is fueled by a potent mix of geopolitics, currency movements, and structural demand.
Geopolitical Tensions & Safe-Haven Demand: Recent uncertainty, including U.S. tariff threats on European countries linked to Greenland, has sent global investors scrambling for safety. Gold has historically been the ultimate "safe-haven" asset in times of turmoil, and this episode is no different. GlobalData notes that such geopolitical risks keep a "sustained risk premium" baked into prices.
The Falling Indian Rupee: Gold and silver are priced in U.S. dollars globally. When the rupee weakens against the dollar, it takes more rupees to buy the same ounce of metal. This currency translation effect has significantly amplified the price rise for Indian buyers, insulating domestic prices even when global markets cool slightly.
Unstoppable Industrial Demand for Silver: Silver's rally has a powerful extra engine: industry. Unlike gold, over half of global silver demand now comes from industrial uses. It's a critical component in solar panels, electric vehicles (EVs), electronics, and AI data centers. The Silver Institute forecasts this demand will only accelerate, creating a persistent structural deficit in the market.
The Indian Context: ETFs Boom, RBI Pauses, and Wedding Bells
The market dynamics within India reveal how consumers and institutions are adapting.
Investors Pile into Gold ETFs: As physical jewellery demand shows price sensitivity, investment demand is breaking records. According to the World Gold Council, Indian Gold ETFs saw unprecedented net inflows of ₹116 billion in December 2025 alone, bringing total holdings to a historic high. This shift highlights gold's growing role as a financial portfolio diversifier for the modern investor.
The RBI's Golden Valuation: The Reserve Bank of India (RBI), a major gold buyer in recent years, has slowed its purchases. However, due to the sheer rise in prices, the value of its existing reserves has ballooned. The RBI's gold holdings now make up a significantly larger share of India's record-high foreign exchange reserves, showcasing how price appreciation strengthens national balance sheets.
Consumers Get Creative: High prices are changing on-the-ground behaviour. Jewellers report robust "exchange activity," where customers trade in old jewellery for new. There's also a marked shift towards lightweight and lower-purity (18k or 14k) jewellery, especially for wedding purchases, as buyers stick to budgets without foregoing tradition.
What’s Next? Experts Weigh In on the Road Ahead
The consensus among analysts is that the supportive environment for precious metals is far from over, though the path may be volatile.
GlobalData has sharply revised its forecasts upward, projecting gold could reach $6,100-$6,700 per ounce (roughly ₹1.75-₹1.95 lakh/10g) by end-2026. They are even more bullish on silver, forecasting a potential rise to $175-$220 per ounce (approximately ₹3.8-₹4.6 lakh/kg) due to its deepening industrial deficit.
"The market is pricing in a sustained risk premium," says Ramnivas Mundada of GlobalData. "Gold is still the primary hedge against geopolitical shocks, but silver is increasingly benefiting from both safe-haven spillover and industrial tightness".
Key Takeaways for Investors:
Gold is increasingly viewed as portfolio insurance in an uncertain world.
Silver is a high-volatility play with dual drivers of investment and industrial demand.
Phased investment and disciplined position sizing are recommended over chasing prices after such a sharp rally.
As the Union Budget approaches, the industry is watching for any policy changes on gold import duties, which could provide short-term relief. However, the long-term trajectory appears firmly tied to global narratives of uncertainty, green energy transitions, and a weakening rupee, suggesting these record prices may be the new normal for the foreseeable future.
