Gold prices see uptick globally: Should you buy or hold?
What's the story
Gold prices have crossed ₹1 lakh per 10g in India. The surge is due to a combination of geopolitical tensions, currency fluctuations and safe-haven demand. The precious metal's price has been on an upward trend as investors seek refuge from global instability. On Friday, gold futures traded at ₹1,02,025 per 10g on the Multi Commodity Exchange (MCX), up by ₹557 or 0.55%.
Tariff impact
Trump's tariffs on India could stoke inflation
The recent spike in gold prices can largely be attributed to US President Donald Trump's return to protectionist trade policies. His administration has reintroduced heavy tariffs, including a 50% levy on Indian imports. These measures were ostensibly taken in response to India's energy purchases from Russia. Experts warn that these tariffs could hurt India's economic growth by up to 0.6% of its GDP and weaken the Indian rupee further, making gold more expensive in rupee terms.
Dollar depreciation
Weakening of the US dollar cause of worry
The weakening of the US dollar has also contributed to the rise in gold prices. As the greenback fell by 0.5% to 97.96 in recent sessions, gold became cheaper in other currencies, attracting global investors. This trend is usually seen during periods of declining confidence in fiat currencies, and has historically coincided with rising bullion prices.
Investment trends
Central banks' gold buying spree continues
Institutional buying has also supported the rally, with central banks continuing to add to their reserves and exchange-traded fund (ETF) inflows surging in recent weeks. This trend, along with fears of a global economic slowdown and potential interest rate cuts by the Federal Reserve in September, has strengthened the bullish case for precious metals.