MUMBAI: The continuing weakness of the dollar coupled with the increasing trade friction between the US and China—with the former hiking import duties on shipments from the latter to 245% from 125%-- has led to the safe haven asset gold hitting a new high, going past the USD 3,300/ounce-mark in the global markets and scaling past the Rs 95,000/10 gram-mark in the domestic market on Wednesday.
The domestic price movement also has to do with the upcoming festival Akshay Tritiya falling on April 30, traders said.
On the MCX, gold opened higher at Rs 94,573 from the previous close of Rs 93,451 and went onto jumped as much as by Rs 1,984, or 2.12%, to hit a record high of Rs 95,435/10 grams.
While in the domestic market, gold was trading at Rs 95,090 per 10 grams today up 1.66% from the previous closing price, on the Chicago Mercantile Exchange, the yellow metal was trading (spot) at USD 3,316 an ounce—an ounce is 28.35 grams, at 1700 hrs IST. This is around 28% ferocious rally so far this year, coming on the back of the 22% jump in 2024.
Silver also recorded solid gains in the futures market with prices jumping 1.56% to Rs 96,253/kg on the MCX, after briefly touching an intra-day high of Rs 96,344/kg.
Another reason for the rising prices is the losing value of the dollar as the global reserve currency-- the dollar index eased by 0.5% against its rivals falling below 99 today and making gold more attractive for other currency holders. This has central banks continuing with their gold buying spree in 2025, according to the World Gold Council. The world’s biggest gold buyers now are the East European central banks.
This has leading analysts like Goldman Sachs forecasting gold rallying to USD 4,000/ ounce by mid-2026.
According to Renisha Chainani of Augmont Gold, the active June contract gold is expected to continue its bullish momentum to touch USD 3320 (Rs 95,500) going ahead.
Kaynat Chainwala, commodity researcher at Kotak Securities said investment demand continues to strengthen gold, with data from the World Gold Council showing that Chinese gold ETFs recorded robust inflows, rising by 29.1 tonnes in the first 11 days of April alone.
Analysts at Tata Mutual said apart from the trade war-induced rally another issue driving gold prices is the huge demand form central banks, mostly from Asia. China, the largest buyer holds around 8% of its reserves in gold, compared to 70% for the US, Germany, France, and Italy. The global average is roughly 20%.
The report also quoted a Goldman Sachs report which estimates central bank buying could average 100 tonne per month in 2025.
While Goldman Sachs has target of USD 3,700/oz to USD 4,500) on central banks demand, UBS pegs it at USD 3,500/oz on safe haven demand and Bank of America sees it peaking to USD 3,500 on geopolitical risk premium.
When it comes to ETFs, the gold-silver ratio has surged to 100, one of the highest levels seen in recent years. This means silver is significantly undervalued compared to gold based on historical average of 60-70. The elevated ratio reflects gold’s strong safe haven demand amidst global uncertainties, while silver has lagged due to its higher industrial usage exposure and muted global growth outlook, the Tata AMC report said.