MUMBAI: In the run-up to the reciprocal tariffs that US president Donald Trump was to announce last night investors flocked to gold on the safe haven status pushing the spot price to a staggering $3,200-mark, but as the details of the tariff war sunk in on Thursday the metal, which has surged 22% so far this year on the back a ferocious 22% run in 2024, began to bleed as was trading 2% down this evening.
The rally got a sudden break as investors began to worry more about the health of the global economy as the much more and wider than anticipated tariffs—over 62% in China and an average flat 10% on as many as 180 nations, have roiled the global sentiment in other asset classes leaving investors deeply bleeding.
In the domestic market, at $3,200/ounce in the US means prices would be have crossed Rs 93,500/10 gram mark but since the domestic prices are a blend of London and Dubai prices the peak was 9,380 today.
Riya Singh, research analyst at Emkay Global, said rising trade tensions, triggered by Trump’s aggressive tariff stance, have heightened financial instability, pushing investors toward gold as a shield against uncertainty. With fears of a looming recession and growing expectations of Federal Reserve rate cuts, demand for gold continues to climb.
“Also, a weaker dollar, turbulent stock markets, and rising stagflation risks are likely to sustain gold’s strength. Key support stands at $3,095, with resistance at $3,185,” she said.
For the domestic gems and jewellery sector this is “a big setback as the US has announced retaliatory tariffs. While in the broader sense, it will be 26% as against zero now. The gems and jewelry sector will be the most affected as import tariffs may be up to 20% from the current 0% on loose diamonds and 5.5-7% on gold jewelry. The US is the largest jewelry export markets, accounting for almost 30% of the share and worth over $11 billion annually,” Singh said.
Renisha Chainani, head of research at gold trading platform Augmont Gold told TNIE that the overnight rally to touch $3,200 was due to the deepening trade war and the resultant likely recession in the US and a few other large economies.
“Investors rushed to safe-haven assets, including gold, after Trump imposed a much higher-than-expected import tariffs with a flat 10% on all inward shipments and a high 62% on China, which is the world’s largest factory, escalating the already-heated global trade war. Fears of a US recession and a slowing global economy are fueling a rush for gold, which might propel the commodity even higher,” he said.
However, he does not see the rally continuing and expects the prices to range in $3200 (Rs 92,000)-$3250(Rs 93,500) level going forward. For silver he sees the metal trading in a range of $32-$35 and if prices sustain above $35, it can continue the uptrend and could scale to $38 or Rs 1,10,000 a kg.