India-Pakistan Border Clash:
Tensions between India and Pakistan have increased after recent military strikes.The Indian Army targeted nine terror camps in Pakistan and Pakistan-occupied Kashmir as per report. In response, Pakistan also launched military action. These events raised concerns about how geopolitical stress could impact gold prices.
Gold prices in India rose sharply. On May 7, 2025, the price of 10 grams of gold (99.9% purity) reached ₹1,00,750. The price rose by ₹1,000 more than the previous day. Analysts say this rise is linked to geopolitical tensions, especially military actions between India and Pakistan. Both countries are major consumers of gold. In times of instability, gold demand increases. Gold prices hit a 27-month high during border tensions in 2002. In 2022, during the Russia-Ukraine war, prices rose 8%. History shows that conflicts usually push gold prices higher.
In the international market, gold also reacted. On May 6, 2025, global prices jumped 3.5%, reaching $2,450 per ounce. Apart from the India-Pakistan conflict, issues like US-China trade talks and the Ukraine crisis played a role. The fall in the Indian rupee adds to domestic price increases.This makes imports costlier.
Some reports suggest gold prices could fall. The price of 22-carat gold dropped to ₹90,750 and 24-carat to ₹99,000 in cities like Mumbai. Spot gold in global markets dropped 1.8% to $2,369.65 per ounce. Peace talks between the US and China and steady Federal Reserve interest rates helped lower prices. If India-Pakistan tensions ease and the rupee gains value, gold imports become cheaper. Domestic prices may fall.
A strong US dollar can also push gold prices down. When the dollar strengthens, gold becomes expensive in other currencies. This lowers global demand. Profit booking in Indian markets also caused temporary dips in price.
India-Pakistan conflict affects more than just gold. It strains national budgets and slows infrastructure work. In Pakistan, high foreign debt and dependency on remittances worsen the economic situation. Unstable economies lead to higher gold demand due to cultural factors like weddings and festivals.
Experts say if tensions continue, gold prices could reach new highs. If peace is restored, prices may ease. Central bank policies and global currency trends will also influence future prices.
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