Gold Prices Dip in Kerala After Record Highs: What’s Driving the Correction?
After surging to unprecedented levels, gold prices in Kerala have taken a step back, reflecting global market volatility, profit-booking, and geopolitical uncertainties.
Introduction
Kerala, renowned for its deep-rooted affinity for gold, witnessed a dramatic surge in gold prices in the first half of June 2025. Prices reached historic highs, only to see a swift correction as global market dynamics shifted. This article delves into the recent price action, the factors influencing the correction, and what lies ahead for gold buyers and investors in the state.
Gold Price Milestones in June 2025
• Record Highs:
On June 14 and 15, 2025, gold prices in Kerala peaked at ₹74,560 per sovereign (8 grams) and ₹9,320 per gram for 22-carat gold, marking the highest levels ever recorded in the state.
• Recent Correction:
By June 16, prices fell by ₹120 per sovereign, settling at ₹74,440, while the per-gram rate dropped by ₹15 to ₹9,305 for 22-carat gold. The downward trend continued into June 17, with 22-carat gold at ₹9,304 per gram and 24-carat at ₹10,150 per gram.
• Short-Term Trend:
The price movement over the past week reflects a mild bearishness after a sharp rally, mirroring corrections seen in international bullion markets.
Key Factors Behind the Price Drop
1. Global Profit-Booking
A significant contributor to the recent decline has been profit-booking by international traders. After gold hit record highs, many investors chose to cash in on their gains, leading to a pullback in global prices that quickly filtered down to local markets in Kerala.
2. International Market Volatility
The international price of gold dipped to $3,414.32 per ounce as per recent Reuters data, reflecting a broader trend of volatility in global bullion trading. This has a direct impact on domestic prices, given gold’s status as a globally traded commodity.
3. Geopolitical Tensions
Ongoing tensions in West Asia, particularly between Iran and Israel, have played a dual role. Initially, they drove prices higher as investors sought safe-haven assets. However, as the situation stabilized or as traders locked in profits, prices corrected downward. The geopolitical risk premium remains a key variable for gold prices going forward.
4. US Federal Reserve Policy Uncertainty
There is lingering uncertainty regarding the US central bank’s next move—whether to cut interest rates or maintain a pause. Lower rates typically make gold more attractive compared to bonds, supporting higher prices. Any signals from the Fed could trigger further swings in gold prices globally and in Kerala.
Current Gold Prices in Kerala
Gold prices showed slight fluctuations over the past few days. On June 14–15, 22K gold was priced at ₹9,320 per gram and 24K at ₹10,168 per gram, with one sovereign (8g of 22K) costing ₹74,560. On June 16, prices dipped slightly, with 22K gold at ₹9,305 and 24K at ₹10,151, bringing the sovereign price down to ₹74,440. The downward trend continued marginally on June 17, as 22K gold was priced at ₹9,304 per gram and 24K at ₹10,150, with the sovereign rate dropping to ₹74,432.
Historical Perspective and Consumer Sentiment
Kerala’s gold price history is marked by periodic surges, often driven by global events and local demand spikes during festivals and weddings. The recent correction is seen as a healthy pause, allowing buyers who missed out during the rally to reconsider their purchases. Local jewellers report steady footfall, with some consumers waiting for further dips before making large purchases.
Outlook: What’s Next for Gold in Kerala?
• Short-Term:
The market is expected to remain volatile, with prices sensitive to global economic data, central bank decisions, and geopolitical developments.
• Medium-Term:
If the US Federal Reserve signals a rate cut or if geopolitical tensions flare up again, gold could find renewed support. Conversely, easing tensions and stronger equity markets may keep gold prices in check.
• Long-Term:
Kerala’s cultural affinity for gold and its role as a hedge against inflation and uncertainty suggest that demand will remain resilient, even as prices fluctuate.
Conclusion
The recent fall in gold prices in Kerala after reaching record highs is a reminder of the metal’s sensitivity to global events and market psychology. While the correction offers relief to prospective buyers, the underlying drivers—geopolitical risks, central bank policies, and investor sentiment—will continue to shape the market in the days ahead. For Kerala’s gold-loving public, the message is clear: stay informed, watch the trends, and seize opportunities as they arise.
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The image added is for representation purposes only
