Gold Prices Surge Amid US-China Trade Tensions
Hyderabad: Gold prices have reached unprecedented heights, soaring past $3,300 per ounce in international markets on Wednesday. This surge, driven by escalating tensions in the US-China tariff war, has pushed domestic gold prices close to the ₹1 lakh per 10 grams mark, with significant implications for consumer behavior in India.
Record Highs in International and Domestic Markets
On Wednesday, gold prices hit a new record of $3,318 per ounce in international spot markets, marking a significant increase that has reverberated through domestic markets. In Delhi, gold prices surpassed the ₹98,000 threshold, closing at ₹98,100 by evening. The Multi Commodity Exchange (MCX) also reported a historic high for June futures, reaching ₹95,435. Saumil Gandhi from HDFC Securities noted that this spike in gold prices followed a series of tariff-related announcements, including a recent investigation ordered by US President Donald Trump into critical minerals, which has led investors to seek safe-haven assets like gold.
Consumer Demand Takes a Hit
Despite the soaring prices, consumer demand for gold has notably declined. Avinash Gupta, vice-chairman of the All India Gem & Jewellery Domestic Council, highlighted that gold is currently being sold at a discount compared to import prices in local markets. He pointed out that since a dip in prices to $2,982 on April 8, gold has surged by $336 per ounce, an 11% increase in just eight days. This rapid rise has led to a situation where more consumers are opting to sell their gold to book profits or exchange old jewelry rather than purchasing new pieces. Gupta remarked that drastic price increases often dampen consumer sentiment, impacting retail sales.
Silver Prices Lag Behind
While gold prices have skyrocketed, silver has not experienced the same momentum. On Wednesday, international spot prices for silver were recorded at $32.8 per ounce, with domestic prices crossing the ₹1 lakh per kilogram mark in Delhi. Gupta explained that silver demand is primarily driven by industrial needs, but the ongoing tariff wars threaten to trigger a recession, which could stifle its growth. He suggested that if the trade tensions ease, silver could see a rapid increase in value.
Future Outlook for Gold Prices
Experts predict that the bullish trend in gold prices may continue, fueled by ongoing uncertainties in the global market. The current geopolitical climate and economic factors surrounding the US-China trade war are likely to keep gold in high demand as a safe-haven asset. As the situation evolves, market participants will be closely monitoring developments that could further influence gold and silver prices in the coming weeks.
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