Gold prices soared to a new high of ₹85,665 per 10 grams on Monday in the domestic market, driven by a strong trend in the international market. This surge came as investors sought refuge in the precious metal amidst concerns of rising inflation following the imposition of significant tariffs by US President Donald Trump on certain products.
Traditionally considered a safe haven during currency depreciation and inflationary pressures, gold witnessed a sharp increase in spot market prices in India, rising by ₹966 per 10 grams to reach ₹85,665 on Monday from ₹84,699 on Friday, as per data from the Indian Bullion and Jewellers Association of India.
In the global markets, the price of gold surpassed $2,900 per ounce after Trump’s announcement of impending tariffs on several countries, leading to heightened economic uncertainty and boosting the appeal of gold as an investment option.
Additionally, the depreciation of the rupee against the dollar played a role in the rally of gold prices. The rupee touched a record low of 87.92 against the US dollar, further bolstering the attractiveness of gold as a safe asset.
Furthermore, concerns over Trump’s statements regarding the Gaza strip and the geopolitical risks in the Middle East region added to the uncertainty, prompting investors to flock to gold. In the MCX, gold for delivery in April hit an all-time high of ₹85,384 per 10 grams and closed at ₹85,325.
Colin Shah, Managing Director of Kama Jewelry, highlighted that the rally in gold prices was supported by fears of a potential trade war between the US and China, which could trigger a global economic slowdown. He predicted that gold prices could reach $3,000 an ounce in the international markets and ₹88,000 per 10 grams in the domestic market.
Jateen Trivedi, VP Research Analyst at LKP Securities, noted that gold experienced substantial gains, surging above ₹85,800 on MCX and reaching $2,900 in spot markets, as trade war concerns escalated due to Trump’s new round of tariffs. The uncertainty surrounding global trade, combined with the rupee’s depreciation, provided significant support to gold in the domestic market.
Looking ahead, Trivedi anticipated a positive trend for gold, with a projected price range of ₹84,000-₹86,500 in the coming days. Meanwhile, gold reserves in India increased by $1.242 billion to $70.893 billion in the previous week, according to the latest RBI data.
Overall, the spike in gold prices can be attributed to a combination of factors, including geopolitical tensions, trade war fears, and currency fluctuations, signaling a growing preference for gold as a safe investment option during times of uncertainty.
The article was published on February 10, 2025.
