CHENNAI: The city recorded an unprecedented spike in gold prices on Thursday, with rates climbing by a staggering Rs 9,520 per sovereign (8 grams) and Rs 1,190 per gram in just one day, pushing the price to Rs 1,34,400 per sovereign and Rs 16,800 per gram.
The surge is part of a volatile, year-long upward trend for the precious metal. Explaining the reasons for the spike, Shantakumar, secretary of the Madras Jewellers and Diamond Traders Association, cited multiple factors. "Inflation, shifting market dynamics, and heightened demand — both physical and online— are driving prices. Additionally, specific contract expires on the Multi-Commodity Exchange (MCX) around January 31 have impacted rates, he stated. He also pointed to international market changes and increased gold reserve purchases by several countries as key contributors.
Shantakumar projected that gold could reach Rs 2 lakh per sovereign by the end of December. He noted that the steep prices have already dampened wedding-season purchases, with buyers reducing their intake — for example, purchasing six sovereigns where they might have bought 10 previously.
Mirroring the trend, silver prices also rose sharply, trading at Rs 425 per gram on the same day.
"The gold rate has increased drastically. The purchasing capacity of people in all income levels have been affected. But the middle class and lower middle class struggle especially during the wedding. As part of Indian tradition, a ‘mangalsutra’ is expected to be of at least two or three sovereigns, for which now they have to shell out around Rs 2 or 3 lakh, affecting their whole budget," said M Somasundaram, a consumer activist in Chennai.