Gold prices hit a record high of Rs 85,665 per 10 grams on Monday in the domestic market following a firm trend in the international market. Investors stocked up on fears of inflation shooting up again following US President Donald Trump’s imposition of stiff tariffs against select products.
Gold is usually seen as a safe haven when currencies decline and inflation looms.
Spot market prices of the yellow metal in the domestic market gained ₹966 per 10 grams to ₹85,665 on Monday against ₹84,699 on Friday, according to the Indian Bullion and Jewellers Association of India data.
The yellow metal inched to a new high of above $2,900 per ounce after Trump announced plans to impose tariffs on several countries next week. This led to rising economic uncertainty and boosted gold.
Rupee’s fall
A weak rupee against dollar was also one of the reasons for the rally in gold prices. The rupee fell by 49 paise to reach an all-time low of 87.92 against the US dollar.
This apart, concerns over Trump’s comments regarding plans for the Gaza strip have raised worries about geopolitical risks in the Middle East region.
The uncertainty surrounding Trump’s latest trade decisions and geopolitical developments have pushed investors towards gold, which is traditionally considered a safe investment during global crisis.
In MCX, gold for delivery in April touched an all-time high of ₹85,384 per 10 grams and closed at ₹85,325.
Trade war fears
Colin Shah, Managing Director, Kama Jewelry said the rally in gold prices was supported by a fear of a possible trade war between the US and China unleashing a global economic slowdown. Given the uncertainty of the trade war and geopolitical tensions, gold prices should touch $3000 an ounce in the international markets and Rs 88,000 per 10 grams in the domestic market, he said.
Jateen Trivedi, VP Research Analyst – Commodity and Currency, LKP Securities, said gold witnessed strong gains, surging above ₹85,800 on MCX and hitting $2,900 in spot markets as Trump’s new round of tariffs on metal products intensified trade war concerns.
“With no specific clarity on which countries are included or excluded, uncertainty in global trade has driven significant bullion buying. Rupee’s lowest level of 87.94 also provided major support to gold in the domestic market,” he said.
Given the growing risk-off sentiment, gold is expected to maintain a positive trend, with a projected range of ₹84,000-₹86,500 in the coming days, said Trivedi.
Meanwhile, the gold reserves in India went up by $1.242 billion to $70.893 billion in the previous week, according to the latest RBI data.