In times of inflation, the value of cash falls. Because gold is denominated in US dollars, it becomes cheaper to buy when currencies like the US dollar drops in value resulting in higher demand and thus higher prices.

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Shortages in oil supplies from the Black Sea and exacerbated disruptions in pandemic-hit supply chains sent investors packing for gold, a safe-haven commodity during times of crisis.

The Thai Gold Traders Association predicts gold prices could reach 33,000 baht (US$985) if the Russia-Ukraine conflict continues.

Those looking to profit from the price surge however, may be better off delaying any sales for now, to hedge against weakening currencies and to secure a possibly higher price later, says Aat Pisanwanich, who directs the Centre for International Trade Studies at the University of the Thai Chamber of Commerce.

“If you sell gold for cash now, it wouldn’t be worth much during inflation,” he said.

Domestic prices of gold in India hit 55,500 rupees (US$729) per 10 grams of 24 carat gold earlier this month, close to the all-time high of more than 56,000 rupees (US$736) in August 2020 when a similar panic over the pandemic pushed up demand.

Pankaj Dhariya, 34, a sales executive in the northern Indian state of Uttar Pradesh had to call off his wedding in April because “the bride’s side couldn’t afford to give us any gold”.

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“My father advised the bride’s family to [buy] the gold on instalment, but they said that after incurring such high expenses on catering, venue, gifts and clothes, they could only afford to give me silver jewellery. The wedding was called off immediately,” he said.

A 28-year-old Indian bride and schoolteacher in New Delhi, who declined to be named, was heartbroken when her mother had to sell her own jewellery to buy new expensive gold for her nuptials in May.

“My mother-in-law was very insistent that we give a minimum of 20 grams of gold as part of my trousseau else the marriage wouldn’t take place,” she said.

Elsewhere in rural India, many are capitalising on the price surge and selling their gold to mitigate another crisis – pandemic-driven business losses.

The Reserve Bank of India said many Indians took out short-term loans with gold being offered as collateral.

Those not getting married are cautiously watching gold’s volatility, preferring to buy when prices are stable again.

Jewellers are seeing a decrease in demand amid high prices.

“We have seen a steady fall in retail buying, with people wanting to get clarity on pricing. Young investors are flocking to gold bonds and mutual funds instead of gold,” said Arjun Varadaraj, Executive Director of NAC Jewellers, one of the largest jewellery stores in the gold hub of Chennai.

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In New Delhi, the situation is similar.

Ankit Surana, owner of Surana Jewellers said “people were watching the climbing prices with trepidation”.

“It’s probably the worst dip in buying in recent history. There’s panic selling … the current volatility in the market is akin to what was seen at the start of the pandemic,” Surana said.

Owner of Padmavati Jewels, Arun Parakh, also in New Delhi, said many people were doing what Sharma’s mother did – swapping family heirlooms for expensive gold.

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“Because of uncertainty and high volatility in prices, people are waiting for the prices to stabilise before making new purchases,” Parakh said.

Indeed, gold prices have fluctuated and will continue to do so. After rising dramatically when the Ukraine-Russia crisis broke out, gold prices quickly fell on the development of peace talks. They held up after the Federal Reserve hiked up interest rates last week, despite expectations gold prices would fall on a higher dollar.

Two days later, an averted Russian bond payment default sent gold prices downwards.

Despite the fluctuations however, the World Gold Council predicts that inflation is here to stay and will add to gold’s appeal.

It expects gold to continue to act as a “diversifier” against the equity and cash markets.

“Recent events represent a clear example of why gold is such an effective and well-established hedge against both expected and unexpected market risks,” the council said in a note earlier this month.

Additional reporting by Su-Lin Tan and Kalpana Sunder