Thiruvananthapuram: Gold prices in Kerala have started climbing again after a sharp decline last week raised hopes among jewellery buyers. There were expectations that the price of one sovereign might soon fall below ₹1 lakh. However, gold prices have risen over the past two trading sessions.
On Monday morning, the price of gold increased by ₹15 per gram to ₹13,085. The price of one sovereign (8 grams) rose by ₹120 to ₹1,04,680. The price of 18-carat gold increased by ₹10 per gram to ₹10,705. Silver prices remained unchanged at ₹220 per gram.
The slight recovery in international gold prices contributed to the increase in Kerala. After falling to around $3,979 per ounce, international gold prices recovered to $4,009. The international price stood at $4,010 when Kerala’s gold rates were determined earlier, compared with $3,996 on Saturday. The relatively small change resulted in a modest increase in local prices.
The recovery comes ahead of a key monetary policy announcement by the US Federal Reserve this week.
Despite crude oil prices hovering near $115 per barrel, expectations that the US Federal Reserve would not raise interest rates led to declines in the US dollar index and US bond yields. Crude oil prices also eased from $117 to around $114 per barrel, providing an opportunity for gold prices to recover.
Bank of America differs from bullish gold forecasts
While major global financial institutions, including UBS and Goldman Sachs, have forecast that international gold prices could cross $5,400 per ounce by 2027, banking giant Bank of America has presented a contrasting outlook.
If international gold prices reach $5,400 per ounce, the price of one sovereign in Kerala could exceed ₹1.35 lakh, potentially breaking the existing record of ₹1.31 lakh set in January.
However, Bank of America has warned that international gold prices could fall to around $3,500 per ounce. If that happens, the price of one sovereign in Kerala could decline to approximately ₹94,000, depending on exchange rates, import costs and other local pricing factors.
Why does Bank of America expect gold prices to fall?
Bank of America has cited several factors behind its bearish outlook on gold.
- Oil prices and gold: Since crude oil prices crossed $90 per barrel on August 20, international gold prices have reportedly fallen by 8.3%, while oil prices have risen by 15.4%.
- Geopolitical tensions: If geopolitical conflicts continue and crude oil prices climb to $150 per barrel, gold prices could fall towards $3,500 per ounce by next year, according to the bank’s assessment.
- Strong gains in 2025: International gold prices rose by 64% in 2025. Large-scale purchases by major central banks, including the Reserve Bank of India and the People’s Bank of China, along with growing interest in gold exchange-traded funds (ETFs) and geopolitical uncertainty, supported the rally.
- Sharp rise early in 2026: Gold prices rose by 14% in January and 4.8% in February 2026. The US-Iran conflict reportedly began towards the end of February.
- Recent price fluctuations: Rising oil prices subsequently put pressure on gold. Prices recovered in August, when gold recorded a gain of 13%, before coming under renewed pressure in September, falling by 6.6%.
With the US Federal Reserve’s policy decision approaching and global markets responding to movements in crude oil prices, the dollar and geopolitical developments, gold prices are likely to remain volatile. For buyers in Kerala, whether prices move towards ₹1 lakh or fall further will depend largely on the direction of international markets.
