The tariffs imposed by US President Donald Trump on several countries, including Mexico, Canada, and China, are raising global concerns about a potential trade war. The economic uncertainty stemming from these developments is driving increased demand for safe-haven assets like gold and silver, leading to a significant rise in their prices. Gold, in particular, has risen by 10% this year, outpacing Bitcoin, which has seen a decline of over 3%. Analysts are predicting that silver, which has remained relatively stable thus far, may soon surge to Rs 1,15,000 per kg in the coming months.
As of now, gold is priced at Rs 86,038 per 10 grams, while silver is trading at Rs 97,070 per kg.
Renisha Chainani, Head of Research at Augmont, highlighted, “Trump’s tariffs, seen as likely to escalate economic uncertainty, have driven gold prices up more than 10% this year, as investors flock to safe-haven assets.”
Overview of Trump’s Tariffs
On Tuesday, President Trump imposed a 25% tariff on imports from Mexico and Canada, alongside a doubling of tariffs on Chinese goods to 20%. These actions have stoked fears of a global trade war that could stifle economic growth and drive up costs for American consumers already grappling with high inflation.
In response, China introduced 15% tariffs on US agricultural products and imposed trade bans on certain defense companies. Canada levied phased tariffs on $107 billion worth of US goods, while Mexico has pledged countermeasures.
Trump also indicated that reciprocal tariffs will be implemented against several countries, including China and India, with the move aimed at boosting the US economy. These tariffs are expected to take effect on April 2.
Impact on Gold and Silver Prices
Kaynat Chainwala, Assistant Vice President of Commodity Research at Kotak Securities, noted, “Comex Gold closed above $2,925 per ounce on Tuesday, marking its second consecutive gain, as the dollar weakened to 105.5, its lowest level since December, amid growing trade tensions.”
Chainani from Augmont added that gold prices are continuing their rebound above $2,900 (Rs 85,400), with the next resistance levels expected to be $2,940 (Rs 86,300) and $2,975 (Rs 87,000).
Silver Prices Could Soar to Rs 1,15,000
Chainani also mentioned that silver continues to trade within the range of $31.5 (Rs 93,000) and $34 (Rs 97,000). However, once the price surpasses this range, silver is expected to rise toward $38 (Rs 1,15,000).
Kunal Shah, an analyst at Nirmal Bang, further emphasized the potential for a silver price surge. “Silver has been in a deficit for the past three years, with supply from scrap silver, a key obstacle to price increases, diminishing in India and China. I anticipate silver prices to increase by 15-20% in the next 3-4 months. Among precious metals, silver remains my top pick.”
Upside Limitations for Precious Metals
Despite the positive outlook for precious metals amid ongoing global economic uncertainties, experts caution that there are limitations on how much prices can rise.
Kaynat Chainwala of Kotak Securities explained, “Although gold is currently trading near $2,925, there are limitations on significant upward movement. US Commerce Secretary Howard Lutnick has suggested a possible tariff relief for Canada and Mexico. If such an agreement is reached and tariffs are reduced, it could put downward pressure on gold prices.”
In conclusion, while the tariffs imposed by President Trump have created a volatile economic environment, they have also bolstered the demand for gold and silver. Analysts predict that silver, in particular, may see a substantial price increase in the coming months, though some factors could limit further price escalation.
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