Fears of the US-China trade war escalation and its impact on the US economy remain unabated, driving a fresh leg down in the US Dollar. This prompted the Gold price record rally to resume. Gold price hit a fresh record high of Indian Rupees (INR) 9,4,8 per gram on Wednesday,
At the press time, Gold price changes hands at INR 9,061.05 per gram, rising from Tuesday's settlement price of INR 8,895.96, according to data compiled by FXStreet.
Meanwhile, Gold price increased to INR 105,686.60 per tola, compared to INR 103,760.70 per tola a day earlier.
| Unit measure | Gold Price in INR |
|---|---|
| 1 Gram | 9,061.05 |
| 10 Grams | 90,610.72 |
| Tola | 105,686.60 |
| Troy Ounce | 281,831.20 |
Global Market Movers: Gold price bulls retain control amid trade-related uncertainties
- US President Donald Trump took a U-turn last week and abruptly backed off his hefty reciprocal tariffs on most US trading partners for 90 days. Moreover, Trump suggested that he might grant exemptions on auto-related levies after removing smartphones, computers, and some other electronics from steep tariffs on China.
- Trump, however, said that exemptions were only temporary and kept in place 145% duties on other Chinese imports. Trump further promised to unveil tariffs on imported semiconductors over the next week and also threatened that he would impose levies on pharmaceuticals in the not-too-distant future, raising uncertainty.
- China, on the other hand, increased its tariffs on US imports to 125% last Friday, fueling concerns that a tit-for-tat trade war between the world's two largest economies would weaken global growth. This continues to weigh on investors' sentiment and benefits safe-haven assets, lifting the Gold price to a fresh record high on Wednesday.
- Meanwhile, Trump's rapid shifts in tariff announcements have eroded investors' faith in US policies and weakened confidence in the US economy. Adding to this, bets that the Federal Reserve (Fed) will lower borrowing costs by 100 basis points in 2025 sent the US Dollar sharply lower, to its lowest level since April 2022 last week.
- Data released earlier this Wednesday showed that China's economy grew 5.4% in the first quarter from a year earlier, beating expectations. Other Chinese macro data – Retail Sales, Industrial Production, and Fixed Asset Investment – also came in better than estimates, though it was overshadowed by rising trade tensions with the US.
- Investors now await comments from Fed Chair Jerome Powell for more clues on the interest rate path, which will play a key role in influencing the USD price dynamics. Apart from this, trade-related developments should provide some meaningful impetus to the XAU/USD pair, which seems poised to prolong the uptrend.
FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.
Gold FAQs
Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.
Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.
Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.
The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.
(An automation tool was used in creating this post.)
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