The dollar’s weakness and fears of increased geopolitical risks because of the US-China tariff war are behind gold soaring to new highs. On Friday, spot gold surged to a record high of $3,243 an ounce, before easing towards $3,230.
In India, 24-carat spot gold (999 purity) closed at ₹90,161 per 10 gm, while 22-carat gold used for jewellery ended at ₹89,800.
In addition to the dollar’s weakness and fear of geopolitical risks, investor demand for haven assets such as gold was lifted by equity pullbacks, due to growth concerns, and market liquidity worries amid ongoing quantitative tightening, said the World Gold Council.
Sean Hoey, Managing Director of IBV International Vaults London, said, “As the volatility of US tariff policies continues to wreak havoc on international markets, we are seeing a significant rise in investor demand for safe-haven assets such as gold.”
Index below 100
The dollar Index dropped below 100 as central banks around the world sold US bonds and increasingly bought gold, said Renisha Chainani, Head-Research at Augmont. Traders are now pricing in expectations for three interest-rate cuts in the remainder of the year, with the possibility of a fourth, she said.
Manav Modi, Senior Analyst, Commodity Research at Motilal Oswal Financial Services Ltd, said economic data added to the cautious mood, with US CPI coming in lower than expected at 2.4 per cent and monthly inflation turning negative (-0.1 per cent versus 0.2 per cent previously), raising concerns over growth and lifting gold.
Hoey said London vaults such as IBV International Vaults are witnessing an “unprecedented demand” for secure gold storage. Investors are moving to protect their wealth, while making sure they can also immediately access their assets, as daily fluctuations in the market continue, he said.
Jateen Trivedi, VP Research Analyst - Commodity and Currency, LKP Securities, said the reciprocal tariff actions have injected fresh uncertainty into global trade flows, prompting increased hedge positions in haven assets like gold.
Fundamentals strong
“Despite domestic currency appreciation, the robust global cues and heightened economic concerns have kept sentiment strongly bullish for bullion,” he said.
The WGC said the extent and speed of gold’s rally have drawn out comparisons to previous peaks. However, gold fundamentals are strong. “The willingness to hold and reluctance to sell – given current extreme policy uncertainty – could generate real momentum,” it said.
On inflows into gold ETFs, WGC said Europe was the missing link so far, but it was set right in March as investments poured into ETFs across the globe. Inflows in March were $8.9 billion, taking the total to $21.10 billion for the first quarter.