Gold prices have surged to $3,330.85 per ounce, reflecting a significant increase driven by ongoing economic uncertainty and market volatility. This rise is largely attributed to investors flocking to gold as a safe-haven asset amidst fears of inflation, geopolitical tensions, and fluctuating interest rates.
As the global economy faces turbulent times, many are looking to gold to preserve their wealth. Historically, gold has maintained its value when other markets stumble, making it an appealing option for risk-averse investors. Over the past five years, gold has appreciated by approximately 36%, while the S&P 500 index has seen a nearly 60% return in the same period. This comparison highlights that while gold can be a good hedge against inflation, it may not always be the best long-term investment for those seeking rapid growth.
According to market experts, the recent surge in gold prices can also be linked to the depreciation of the Indian National Rupee (INR), which has amplified the gold price rally in the domestic market. The Multi Commodity Exchange (MCX) gold rates finished at ₹96,535 per 10 grams on Friday, logging a weekly gain of ₹3,835 per 10 grams against the previous week's close of ₹92,700. This puts the MCX gold rate around ₹2,800 away from its record high of ₹99,358 per 10 grams.
Sugandha Sachdeva, Founder of SS WealthStreet, noted that the US Federal Reserve's decision to maintain interest rates at 4.5% during its recent policy meeting reflects ongoing economic uncertainties. This decision, coupled with the Bank of England's rate cut of 25 basis points to 4.25%, has further bolstered gold's appeal as a safe-haven asset.
"Apart from these key policy meetings, overall tariff uncertainty still looms, as the US announced tariffs on foreign-produced movies and threatened to impose tariffs on the pharmaceutical sector, heightening market volatility and increasing demand for gold," Sachdeva explained. Additionally, rising tensions between India and Pakistan have contributed to gold's safe-haven demand, particularly in the domestic market.
Jigar Trivedi, Senior Research Analyst at Reliance Securities, pointed out that the US dollar index edged lower to around 100 on Friday after two consecutive sessions of gains. This decrease comes as traders look ahead to US-China trade talks scheduled for the weekend. President Trump expressed optimism regarding these negotiations, suggesting they could yield tangible progress. Meanwhile, the newly announced US-UK trade deal provided some relief to investors hoping for a de-escalation in global trade tensions.
Market sentiment regarding gold prices remains mixed. As Jateen Trivedi, VP Research at LKP Securities, stated, gold prices are currently oscillating between ₹95,750 and ₹96,750 on the MCX, largely influenced by sharp movements in the Indian rupee. On the international front, Comex gold prices eased as market sentiment turned optimistic following trade-related announcements between the US and Europe.
Looking ahead, market attention will continue to focus on US trade negotiations, with key data such as inflation rates, retail sales, and speeches from Federal Reserve officials, including Chairman Jerome Powell, expected to influence gold prices. Upcoming US-China trade talks introduce uncertainty that could either cap gold's gains or trigger a rally in prices, depending on the outcome.
"For the next week, upcoming US economic data like the Consumer Price Index (CPI), Producer Price Index (PPI), and Eurozone GDP could impact global market sentiment and provide cues for the precious metal," Sachdeva added.
Despite the optimism surrounding trade negotiations, ongoing border tensions and shifting geopolitical narratives continue to lend support to gold prices. Analysts expect gold to remain range-bound between ₹94,500 and ₹97,500, with heightened volatility anticipated as risk sentiment fluctuates.
Technical analysis indicates that gold prices are taking support at the ₹94,500 and ₹92,000 per 10 grams level, while key resistance is seen at the ₹97,500 per 10 grams mark. A breach of this level could push prices toward ₹98,780 per 10 grams and potentially test previous record highs.
On the international stage, gold prices are finding strong support at the $3,280 per ounce mark. If prices continue to trade above this level, analysts predict the precious metal could reach between $3,380 and $3,420.
As for the current gold rates in India, they are as follows: in Delhi, gold is priced at ₹96,540 per 10 grams; in Mumbai, it's ₹96,710; in Bengaluru, ₹96,780; in Chennai, ₹96,990; and in Kolkata, ₹96,580.
In summary, gold's recent surge reflects a combination of economic uncertainty, geopolitical tensions, and market volatility. While it can serve as a valuable hedge against risk, potential investors should carefully assess their goals and understand the dynamics of gold investing before making decisions.
Disclaimer: The views and recommendations expressed in this article are those of individual analysts and do not represent the views of any publication. Investors are advised to consult certified experts before making any investment decisions.
