Inside the surge: Gold's record rally explained | Number Theory

At the same time, the surge has tested the resilience of Indian demand. The charts below explores gold’s record run in detail

Gold is in the middle of an extraordinary run, crossing the $4,000 an ounce mark earlier this month in the international markets, while its domestic price has doubled in recent years. The rally has outpaced many equity benchmarks, raising the question how gold compares with stock market returns both globally and in India. At the same time, the surge has tested the resilience of Indian demand. The charts below explores gold’s record run in detail.

PTI Photo (PTI)

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  Gold prices are surging

  After spending much of the 2010s in the ₹40,000-50,000 range per 10 grams, domestic prices have now surged past ₹100,000, doubling in just a few years. The daily benchmark price from Indian Bullion and Jewellers Association (IBJA) for 999 purity gold was at ₹1,22,629 per 10 grams on Friday. This rally is driven by a mix of factors: inflation worries, geopolitical conflicts, and expectations of US rate cuts that lifted the price of gold in the international market, giving around 53% gains in 2025. Meanwhile, the dollar has weakened, and the rupee has slid steadily, so Indians already invested in gold are getting a double boost—an international price surge and a currency amplification. Central banks, sensing a shift in real rates and debt dynamics, are quietly resuming gold accumulation despite seeing moderation in their purchases earlier this year due to the pricing pressures—they have added a net 19 tonnes of gold to their reserves during August 2025, up from 11 tonnes in July, according to data from World Gold Council (WGC).
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  How does gold compare against S&P500?

  Globally, gold’s strength has been most visible in moments of strain, such as the financial crisis of 2008, the pandemic years, and now the latest bout of geopolitical and economic uncertainty. Over the long run, equities like the S&P 500 have usually delivered higher returns, but gold has provided insurance when markets faltered, often posting its strongest gains in years when stocks stumbled.
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  And how has it fared against the Indian markets?

  In India, the picture looks different. Domestic gold prices have risen much faster than the benchmark BSE Sensex since 2008, reflecting both global market dynamics and the rupee’s steady decline against the dollar. This combination has meant that Indian households, already strong buyers of gold, have seen the metal outperform equities more consistently than global investors over the last 15 years in nominal terms. However, even in India, equities have generally delivered higher returns over longer horizons of two decades or more when adjusted for inflation and dividends, reinforcing gold’s role as a store of value rather than a long-term growth asset.
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  Even when prices are high, Indians love gold

  While data shows that India’s gold imports have softened in years of sharp price increases, the fall has been limited. Even at record highs, demand has not collapsed, suggesting that Indian demand is only a little elastic. This matches what academic work has found. A 2017 study by Paramita Mukherjee, Vivekananda Mukherjee and Debasmita Das conclude that “gold purchasing behaviour of Indian households is unlikely to change on the occasion of price change” and that “this household behaviour is reflected in the nation’s gold import demand pattern.” For instance, in both 2023 and 2024, prices rose sharply by 16% to 20%, yet imports edged higher instead of falling, underlining how seasonal demand and cultural factors can outweigh the effect of cost when it comes to gold in India. WGC data, which tracks consumer purchases by category, shows that demand for gold jewellery in India in 2023 was about 575.8 tonnes compared with 185.2 tonnes for bars and coins, while in 2024 jewellery eased to 563.4 tonnes but bar and coin investment rose to 239.4 tonnes. Even when retail demand for jewellery softened under the weight of higher prices, overall demand went up because households turned to bars and coins, reinforcing gold’s position as both adornment and a trusted savings instrument in India. However, latest WGC data indicates that demand in the first two quarters of 2025 has dropped in the face of the latest massive surge in prices.