Gold prices in the MCX market have seen a slight dip amid growing safe-haven demand due to the macro-economic uncertainty caused by President Donald Trump’s recent tariff announcements. The gold futures contract opened lower at ₹86,058 per 10 grams and quickly dropped to an intraday low of ₹85,980 on Wednesday morning.
Despite this dip, experts suggest that gold’s safe-haven demand will remain strong due to the ongoing trade tensions. They recommend a ‘buy-on-dip’ strategy, anticipating that gold will likely sustain above its current support level of ₹85,500 per 10 grams.
Why the Dip?
Gold prices are currently under pressure as the US dollar has rebounded from two-month lows, which has somewhat stalled the recent rally in gold prices. However, the continued uncertainty surrounding the trade policies under Trump’s administration is expected to support gold prices as investors turn to the yellow metal for safety.
Key Triggers for the Gold Price Rally
Escalating Trade Tensions: The ongoing tariff battle between the US and other nations has heightened gold’s appeal as a safe-haven asset. Despite this, hawkish comments from Federal Reserve officials, including Governors Bowman and Waller, have placed a cap on gold’s gains. They have expressed caution over additional interest rate cuts due to persistent inflationary pressures.
US Federal Reserve’s Policy Outlook: Investors are awaiting the release of the Fed‘s meeting minutes from January, due on Wednesday, which may provide further clarity on the central bank’s stance on interest rates. If the tariffs disrupt the economy significantly, it could lead to rate cuts, which would benefit gold.
Geopolitical Factors: The ongoing Russia-Ukraine conflict continues to influence market sentiment, further boosting gold’s appeal as a hedge.
Gold Price Outlook
Analysts remain optimistic about gold’s longer-term outlook. Anuj Gupta, Head of Commodity & Currency at HDFC Securities, emphasized that despite the recent dip, MCX gold is expected to hold above the crucial support level of ₹85,500 per 10 grams. He advised maintaining a “buy-on-dips” strategy, noting that any further downturn could present an opportunity for a sharp rebound.
Conclusion
While short-term fluctuations are possible due to the strength of the US dollar, the overall outlook for gold remains bullish. The uncertainty around global trade, particularly Trump’s tariff moves, combined with potential interest rate cuts from the Federal Reserve, is expected to keep gold prices supported. For investors, a “buy-on-dips” strategy could be a prudent approach to capitalize on gold’s long-term safe-haven demand.
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