Gold Prices Rise As Central Banks Buy More Bullion: Sitharaman Explains Surge

Gold is rallying as central banks keep adding bullion, investors pile into ETFs, and tariff and geopolitical worries revive safe-haven trades, lifting Indian benchmark rates.

Gold prices have surged again, with domestic and global benchmarks flashing fresh highs and sharp intraday swings. On February 23, 2026, MCX gold (24-carat) opened at ₹160,049 per 10 gm, while IBJA standard gold (999) was quoted at ₹155,066 per 10 gm. 

Comex gold traded around $5,182 per ounce in morning deals. Finance Minister Nirmala Sitharaman has linked the spike to a new driver: central banks worldwide buying and storing more gold and silver, even as tariff threats and geopolitical tensions keep risk sentiment fragile.

What Is Fueling The Rise: Central Banks, ETFs And Risk Triggers?

The government’s latest public explanation is direct. Sitharaman said international gold and silver prices are spiking now not only because of consumer markets, but largely because central banks are buying and holding more of the metals. 

Business Today also flagged renewed tariff threats and geopolitical developments as part of the broader backdrop during the same market phase.
 

The global demand picture adds weight to the argument. Reuters reported that the World Gold Council (WGC) pegged 2025 global gold demand at a record 5,002 metric tons, with investment demand up 84% to 2,175 tons. Central bank purchases were 850 tons, slightly lower than the prior year but still elevated compared to pre-2022 levels.

Read More - Why Borrowers Should Be Careful Before Taking Gold Loans In India

WGC’s Gold Demand Trends: Q4 and Full Year 2025 (released January 29, 2026) also said the LBMA (PM) gold price set 53 new all-time highs during 2025, underlining how persistent the momentum has been.

Here is where the key price markers stood during the February 23 spike, as reported across Indian and global markets.
 

For investors, the “paper gold” channel has also heated up. The Economic Times reported that Indian gold ETFs saw record inflows of ₹240 billion in January, driven by investors shifting away from equities during volatility. 

Globally, WGC’s ETF flow update said January 2026 was the strongest month on record for gold ETF inflows at $19bn, taking global gold ETF AUM to $669bn.

What Changed Over Recent Weeks: Big Swings And Softer Jewellery Demand?

The rally has not been smooth, and that choppiness is changing buyer behaviour. Reuters reported on February 20, 2026 that gold demand in India stayed weak as volatile prices discouraged retail buying even during the wedding season. Dealers widened discounts up to $18 per ounce, versus $12 the previous week, to revive demand.
 

On the price track, Reuters said domestic gold fell from a record high of ₹180,779 per 10 gm last month to around ₹155,000, after dropping as low as ₹133,687 earlier in February. In the global market, spot gold hovered near $5,000 per ounce after sliding to $4,403.24 earlier in February, from a record $5,594.82 on January 29, 2026.

A quick timeline helps explain why sentiment stays jittery despite the uptrend.
 

This environment has also boosted gold-backed lending. LoansJagat reported that the gold-loan portfolio outstanding reached ₹15.6 lakh crore in November 2025, up from ₹7.9 lakh crore in November 2023, citing CRIF High Mark’s CreditScape “Gold Loans in India (Data as of Nov 2025)”, dated January 2026.

Also Read - Gold Loan Book Nears ₹15.6 Lakh Crore As Prices Lift Borrowing Capacity

Millennium Post separately reported a similar system-wide near-doubling to ₹15.6 lakh crore by November 2025. 

With gold prices near record levels, borrowers can unlock higher collateral value through secured lending. Compare lender offers and apply online for competitive rates and check gold loan options on LoansJagat. 

Government, Market And Credit Signals?

Sitharaman’s central view is that central bank accumulation is now a leading driver behind the spike in gold and silver prices.

Market commentary captured by Reuters linked demand to safe-haven positioning during tariff uncertainty, while jewellers responded by widening discounts as footfalls softened.

On the credit side, LoansJagat attributed the surge in gold loans to higher collateral values increasing borrowing capacity and lender preference for secured products. 

Conclusion

Gold is rising on a mix of central bank buying, record-setting investment flows, and recurring risk triggers. In India, the rally is spilling into ETFs, retail discounts, and a larger gold-loan book as higher prices lift collateral values.