315% increase over 10 years; 38% since January: Where are gold prices in Kerala heading?

Gold, once regarded primarily as a symbol of prosperity, tradition and status by Malayalis, has now evolved into a preferred mode of investment and a serious asset class. Long cherished for its emotional and cultural value, the yellow metal is back in the spotlight - this time due to its unprecedented price surge. 

Today, buyers are paying 315 per cent more compared to a decade ago, as the price of bullion continues its steep upward trajectory. In September 2015, the price of one sovereign (8 gm) of gold was ₹19,640. Now, it has skyrocketed to ₹81,440. Just last week, gold touched an all-time high of ₹81,600. 

The gold price has seen the sharpest rise in 2025. Since January, the price for a sovereign has surged by 38 per cent from ₹58,720, making it the fastest annual rise in recent history. The upward trend began to accelerate after Donald Trump assumed office as US President; it was further fuelled by ongoing global tensions such as the Russia-Ukraine war and the Israel-Palestine conflict.

To put it in perspective, over the past five years, the gold price has risen by 113 per cent, averaging about 23 per cent growth per year. In 2020, the price stood at ₹38,160— less than half of what it is today.

As an investment, the value of gold has grown over the years; the price rise has indeed spooked general buyers. Jewellers Onmanorama spoke to said the sharp uptick has spooked customers, with many holding off on purchases for the time being. "Since the price began to surge, the number of customers walking in to buy gold has noticeably dropped. Sales have declined," said Faisal KP, a jewellery shop owner in Wayanad.

"Consumers have a fixed budget, and it's not keeping up with rising prices. We're expecting demand to fall by about 10 to 15 per cent in volume," Amit Modak, chief executive of PN Gadgil and Sons, told Reuters in New Delhi. The December quarter typically accounts for approximately one-third of India's gold sales, as it coincides with the start of the wedding season and festivals. India is the second-largest gold consumer in the world.

However, some jewellers say the effect on overall revenue will be minimal. According to Surendran K, President of the Abdul Nasar faction of the All Kerala Gold and Silver Merchants Association, while the quantity of gold purchased has decreased, the monetary value of transactions has remained steady. "Customers, especially those buying for weddings, usually come with a fixed budget. While they are now getting less gold for the same amount, the revenue hasn’t suffered. Our turnover in terms of quantity is down, but income remains consistent," he said.

Bhima Group chairman Dr B Govindan said people are getting the value for what they are paying.

Gold as an asset class
Industry experts say that people who were once reluctant to buy gold a decade ago are now seriously considering investing in bullion, as the recent price hike signals strong potential for long-term returns.

Gold is traditionally viewed as a safe-haven asset, particularly during times of financial and geopolitical uncertainty. The outbreak of the Russia-Ukraine war and the ongoing Israel-Palestine conflict have led many investors to shift their money into gold, seeing it as a more secure option.

The surge in prices can also be traced back to the introduction of trade tariffs and economic instability during the early months of Donald Trump’s presidency, which further heightened global demand for gold.

This sharp rise in gold prices has not only influenced institutional investors but also drawn interest from ordinary citizens. "Small-scale buyers are increasingly purchasing gold in limited quantities purely as an investment," said Surendran. "People are buying gold in small amounts, not for adornment, but as an investment they hope to cash in on later," he added.

Adding to the current trend is the growing reluctance among people to exchange old gold for new. Jewellers whom Onmanorama spoke to said the number of customers coming in for gold exchange has significantly decreased, with most choosing to hold onto their old gold in hopes of benefiting from higher prices later.

At the same time, gold loans are seeing a surge, said Muthoot Finance MD  George Alexander Muthoot. “Rising gold prices are encouraging more customers to monetise their idle assets, and this is translating into strong growth in gold loans. Higher prices have not only enhanced the value of the gold pledged but also increased customer confidence in leveraging their holdings to meet personal and business needs," he told Onmanorama in a statement.

"In the first quarter of FY26, our gold loan AUM rose to ₹1,13,194 crore, up 40 per cent year-on-year from ₹80,922 crore a year ago. Disbursements to new customers also increased to ₹6,355 crore from ₹5,651 crore in the same quarter last year, with 4.45 lakh new customers availing gold loans during the quarter. In FY25, we achieved a record gold loan disbursement to new customers, amounting to ₹21,888 crore and benefitting nearly 18 lakh first-time borrowers. These figures clearly highlight the growing preference for gold loans as a trusted, inclusive, and accessible source of credit across households and small businesses," he said.

The uptick in price is unlikely to drop anytime soon. Even if there is a decrease, experts believe prices are unlikely to fall below ₹75,000 per sovereign.

Supporting this sentiment are forecasts from global financial institutions, including Goldman Sachs and UBS, which predict that international gold prices could exceed $3,700 per ounce by the end of this year. Currently, gold is trading in the range of $3,500 to $3,600 per ounce, making the target seem well within reach.