MUMBAI: Precious metals began a weak recovery Monday with gold climbing above Rs 1.6 lakh mark/10 gm and silver surging 6% to cross Rs 2.67 lakh in early trade amid rising geopolitical tensions, global tariffs, and a stronger dollar. But by noon, the prices were down to 1.5% and 5% respectively on MCX but are still above three-week high.
Renisha Chainani, head of research at gold trading platform Augmont said gold reclaims $5,150.oz and silver above $85.oz are driven by mounting tariffs and geopolitical uncertainty.
“Since Friday, gold rebounded by about 4% and silver outperformed with gains of over 10%, driven primarily by heightened safe-haven demand amid macro and geopolitical uncertainty. The rebound reflects investor flows back into bullion as risk assets falter and uncertainties mount around economic growth, trade policy and geopolitical risk,” she said.
She added that another boost came from lower-than-expected US GDP data, with the Q4 print at 1.4%, well below forecasts, signalling that economic expansion has lost momentum. At the same time, inflation readings remain persistent, leaving policymakers in a data-dependent stance.
According to Manav Modi, commodities analyst at Motilal Oswal, gold and silver rose to a more than three-week high, as the dollar fell after the US Supreme Court struck down a vast swathe of president Trump's tariffs last Friday and as US-Iran tensions simmered.
The Supreme Court's ruling striking down reciprocal tariffs has weakened Trump’s ability to threaten and impose tariffs at a moment's notice, circumventing the Congress, but it won't end gnawing uncertainty for trade partners or companies. But he has already slapped 1% blanket tariff on all goods from all countries for a temporary 150 days under the provisions of Section 122 of the Trade Act of 1974
Iran has indicated it is prepared to make concessions on its nuclear programme in talks with the US in return for the lifting of sanctions and recognition of its right to enrich uranium, as it seeks to avert a US attack but Washington has not responded favourably yet.
Silver is witnessing a large drawdown of inventories across all warehouses, especially Comex, which is very significant, indicating tight supply and a surge in demand as China remains shut. The focus this week will be on US factory orders, and consumer confidence.