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Gold Prices Breach Rs 1 Lakh Mark on MCX For The First Time Ever

Gold futures in India crossed ₹1,00,000 per 10 grams on the MCX for the first time on 13 June 2025, driven by escalating Middle East tensions, a falling rupee, and robust global demand for safe-haven assets. Analysts warn of further gains as geopolitical instability deepens.

The surge reflects a confluence of factors affecting global commodity markets and investor sentiment, with analysts expecting further upward movement if volatility continues.

Gold prices surged to a historic high on Friday as domestic futures on the Multi Commodity Exchange (MCX) breached the Rs 1 lakh mark for the first time. Gold touched Rs 1,00,403 per 10 grams, up 2 per cent in early trade, amid geopolitical tensions in the Middle East, a weakened Indian rupee, and strong global demand for safe-haven assets.
The surge reflects a confluence of factors affecting global commodity markets and investor sentiment, with analysts expecting further upward movement if volatility continues.

Geopolitical Flashpoint in the Middle East Spurs Safe-Haven Buying

The immediate catalyst for the spike was Israel’s airstrikes on Iran early Friday, sharply heightening tensions across the region. The conflict has prompted Israel to declare a state of emergency, while the United States is reportedly preparing evacuation plans for civilians across conflict zones in West Asia.
“Gold prices extended their gains following Israel’s airstrikes on Iran, intensifying the already fragile geopolitical landscape in the Middle East,” said Aksha Kamboj, Vice President of the India Bullion and Jewellers Association and Executive Chairperson of Aspect Global.
Rahul Kalantri, Vice President for Commodities at Mehta Equities, added, “Gold and silver rallied sharply amid escalating Israel-Iran tensions, boosting safe-haven demand. Gold breached the $3,420 per ounce mark and hit six-week highs as the dollar index weakened.”

Domestic Pressures: Rupee Weakness Amplifies Gold Rally

Apart from international drivers, the falling rupee has played a significant role in the domestic price spike. With the rupee hovering near record lows against the US dollar, imported gold becomes costlier for Indian traders and consumers.
India, one of the world’s largest importers of gold, is particularly vulnerable to exchange rate fluctuations, which have been exacerbated by global risk aversion and foreign capital outflows from emerging markets.

Broader Market Sentiment and Outlook

Gold’s rally mirrors global investor anxiety, with institutional buyers and central banks increasing their bullion holdings. According to the World Gold Council, central banks led by China, Russia, and Turkey have steadily increased their gold reserves over the past 12 months, signalling concerns over currency stability and inflation.
Additionally, speculation over US Federal Reserve policy, concerns about prolonged conflict in Europe and the Middle East, and uncertainty over global growth have all reinforced gold’s appeal as a hedge.

Impact on Indian Economy and Jewellery Sector

While bullish gold prices offer strong returns for investors, they present a challenge for India’s jewellery industry, which could see a decline in consumer demand due to unaffordable price levels. Gold is not only a luxury good but also deeply ingrained in Indian cultural and matrimonial traditions, especially during the wedding and festival seasons.
Retail jewellers are already reporting a slowdown in footfall and demand, with many opting for lightweight or alternative designs. Meanwhile, the Reserve Bank of India may be forced to review its import policies if the rally continues, as it could widen the current account deficit.
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