Gold Prices Soar to Historic Highs Amid Trade Tensions
Gold prices in India surged dramatically on Friday, reaching an unprecedented Rs 96,450 per 10 grams in the national capital. This increase of Rs 6,250 marks a significant rebound from a four-day decline, driven by strong demand from local jewellers and escalating global prices amid rising US-China trade tensions. The All India Sarafa Association reported that gold of 99.5% purity rose to Rs 96,000, while gold of 99.9% purity closed at Rs 96,450, reflecting a broader bullish trend in the market.
Factors Behind the Surge
The recent spike in gold prices can be attributed to a combination of local demand and international market dynamics. Local jewellers have ramped up purchases, contributing to the price increase. Additionally, global gold prices have been influenced by geopolitical uncertainties, particularly the intensifying trade war between the United States and China. Jateen Trivedi, VP Research Analyst at LKP Securities, noted that despite a strengthening rupee, gold’s appeal remains strong due to these external pressures.
On the futures market, gold contracts for June delivery on the Multi Commodity Exchange (MCX) also saw a significant rise, climbing by Rs 1,703 to reach a new peak of Rs 93,736 per 10 grams. This upward trend underscores the growing investor interest in gold as a safe-haven asset amid economic uncertainties.
Global Gold Market Trends
Internationally, gold prices have also reached new heights, with spot gold touching USD 3,237.39 per ounce before slightly retreating to USD 3,222.04. During Asian trading hours, Comex gold futures surged to a record USD 3,249.16 per ounce, driven by strong safe-haven demand. Analysts attribute this surge to fears of a potential global economic slowdown and escalating tensions between the US and China. Kaynat Chainwala, AVP-Commodity Research at Kotak Securities, emphasized that the current market conditions have led to unprecedented demand for gold as investors seek refuge from market volatility.
Implications of the US-China Trade War
The trade conflict between the US and China has escalated significantly, with the Trump administration imposing tariffs of up to 145% on Chinese goods. In retaliation, China has implemented duties of up to 125%, raising concerns about a prolonged trade battle that could destabilize global markets. This situation has also exerted pressure on the US dollar, which has fallen below the 100-mark on the dollar index, further enhancing gold’s attractiveness for global investors.
As tensions continue to rise, the outlook for gold remains bullish. A report from global wealth management firm UBS indicates that ongoing economic uncertainty, fears of stagflation, and geopolitical instability are likely to sustain gold’s upward momentum. Central banks have been increasing their gold purchases, reflecting a broader trend of diversifying reserves away from the US dollar. Analysts predict that as long as these geopolitical and economic concerns persist, gold prices may continue to rise, making it a favored asset for investors.
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