Gold prices have surged by over ₹8,350 per 10 grams over the past six weeks, reaching ₹84,900 per 10 gm on the Multi Commodity Exchange (MCX). This marks a 10.90% increase from ₹76,544 in early December 2024. The precious metal continues to draw attention as a safe haven for investors amidst global economic uncertainty. The MCX gold price recently hit a peak of ₹85,279 per 10 gm, with a weekly gain of over ₹2,500. Globally, gold prices have remained steady, climbing for six consecutive weeks, and are now hovering around $2,886 per ounce in spot markets.
Key Drivers Behind the Rally
The recent rally in gold prices has been driven by multiple factors. According to Anuj Gupta, Head of Commodity & Currency at HDFC Securities, gold prices began rising in late December 2024 due to expectations of a potential rate cut by the US Federal Reserve. The uncertainty surrounding the inauguration of US President-elect Donald Trump, alongside fears of a trade war spurred by his protectionist policies, further boosted gold’s appeal. Additionally, the weakening of the Indian Rupee (INR) provided further momentum to the rally in the domestic market.
Sugandha Sachdeva, Founder of SS WealthStreet, pointed to the US administration’s recent actions, including a 10% tariff on Chinese imports and the threat of further tariffs on Mexico and Canada, as key catalysts. These countries represent 40% of the US’s total trade volume, worth nearly $2 trillion. The retaliatory tariffs from China and the escalating trade tensions have heightened concerns of a global economic slowdown, driving investors toward the security of gold.
Geopolitical Tensions and Rate Cuts Add to Gold’s Appeal
The geopolitical landscape, particularly US President Trump’s controversial statements regarding the Gaza Strip, has added to global uncertainty. The potential for further instability in the Middle East has supported gold’s upward movement.
Gold prices have also benefitted from recent monetary policy actions. Central banks around the world have lowered interest rates, making gold a more attractive investment. The Bank of England, European Central Bank, and Bank of Canada have all cut rates, while the Reserve Bank of India reduced its repo rate to 6.25% from 6.50%, the first cut in five years.
According to a recent report by the World Gold Council, global demand for gold rose by 1% in 2024, reaching a record 4,974.5 metric tons. This growth is attributed to higher investment demand and increased purchases by central banks.
US Economic Data: Weak Job Growth Signals Potential Slowdown
US economic data has added further fuel to gold’s rally. The unemployment rate in the US has dropped to its lowest level since May 2024, hitting 4%. However, the US economy added just 143,000 jobs in January 2025, falling short of the expected 169,000. This disappointing data has raised concerns about the strength of the US economy and deepened investor apprehension.
Gold Price Outlook: Potential for Correction
Looking ahead, Sachdeva expects gold prices to maintain a positive bias, although she warns that a pullback may be on the horizon. Technical indicators show that gold is nearing the upper range of its Bollinger Bands, with the Relative Strength Index (RSI) signaling overbought conditions. Support levels are seen around ₹83,800 per 10 gm, and if this level is breached, prices could fall further to ₹83,300 per 10 gm.
Sachdeva advised investors to remain cautious despite the favorable factors supporting gold’s rise, urging them to monitor key support levels for potential corrections in the near term.
In conclusion, while gold continues to be buoyed by a range of global economic factors, its future trajectory will depend on developments in both geopolitical tensions and global monetary policies.
Related topics:
- India Surpasses China in Gold Purchases, Buying 51% More in Three Months
- Gold Rates Skyrocket in Chennai on Diwali, 24K Gold Exceeds Rs. 81,000 Per 10 Grams
- Tariff Concerns Drive Gold Withdrawals from Bank of England Vault
