Sona kitna sona hai...Gold Prices Surge 32% This Year: Here’s Why the Shine Keeps Rising

Business News: Gold has always been considered a safe investment, especially in India, where the craze for gold jewelry is very high. Indian women have so much gold that it is more than the gold reserves of many developed countries. Recently, global tension has increased after US President Donald Trump came to power again. Especially after his tariff announcement, there has been a stir in the global economy. Due to this, gold is getting stronger and its price has increased by 32% in dollars this year. Let's understand why gold is gaining so much momentum.

Effect of global tariff system

Gold prices have jumped tremendously in the last month since the US announced the implementation of the global tariff system. Investors moved towards gold due to increasing geopolitical uncertainty. The expectation of an interest rate cut from the US Federal Reserve also supported gold. Central banks of many countries are gradually reducing the US dollar reserves. The US dollar has fallen by 11% since the beginning of this year, especially in the initial months. This is the reason why gold is gradually emerging as a safe option in place of other currencies.

Central banks' view and bond market

Bond yields are rising in Europe and Japan, which has led to a decline in the demand for government bonds. Central banks are not only selling dollar reserves but are also insisting on buying gold. According to the report, gold may become the main reserve asset in the coming times, but this possibility is still a little far away.

For this it is necessary that:

• The condition of the global economy worsens.
• Inflation increases everywhere.
• Trade and GDP decline.

At present these conditions have not been fully created, but the recent rise in gold clearly indicates that some investors and central banks are worried and have become cautious about the risk.

Stability in the stock market, but conflicting signals

At the same time, the stock market is giving positive signals at this time.

• The Nifty index is up 5% this year.
• The S&P 500 index is up 9%.
• The US stock market is at a record high.
• The Indian stock market is also close to its record level made in late June.

Volatility Index (VIX):

• The US VIX is at 14.5.
• India's India VIX is at 10.1.

Both the indices are around or below their long-term average. This shows that there is no major concern in the stock market at the moment. However, the gold, currency and bond markets are giving negative signals to the contrary. This means that "Either the stock market is wrong or the gold and bond market is."

Sooner or later, a major correction can be seen in one of these. The question is which market will prove to be right.

Retail vs Institutional Investors

Retail investors are usually more active in shares and gold. Their share in the currency and bond market is less, which is mostly under the control of institutional investors. In the current situation Bond and currency markets are giving pessimistic signals; that is, institutional investors are cautious and worried. At the same time, retail investors are investing in both shares and gold. This shows that they are optimistic but also want to keep their bets safe. History shows that institutional investors often perform better than retail investors. So only time will tell who proves right this time.

Global uncertainty in the market on the rise

At present, gold, the stock market, and the bond and currency markets are giving opposite signals to each other. The 32% rise in gold shows that global uncertainty and investors' concern are increasing in the market. At the same time, the stability of the stock market shows that some investors are still hopeful of economic recovery. In the coming months, it will be clear whose predictions prove correct—the growing attraction of gold or the strength of the stock market.