Gold prices in India witnesses a turnaround Tuesday as the US-China trade war escalates and revives the safe-haven demand for the bullion.
The Chinese Commerce Ministry warned on Tuesday that it “firmly opposes and will take countermeasures if the US enacts additional 50% tariffs.”
US President Donald Trump on Monday threatened to impose a new 50% tariff, which will be cumulative alongside the US's 10% across-the-board tariffs and targeted 34% "reciprocal" tariffs, which are set to take effect on Wednesday, April 9.
Gold price stood at 8,318.25 Indian Rupees (INR) per gram, advancing from the INR 8,251.11 it cost on Monday, according to the FXStreet data.
Gold price rose to INR 97,023.63 per tola from INR 96,239.36 per tola a day earlier.
| Unit measure | Gold Price in INR |
|---|---|
| 1 Gram | 8,318.25 |
| 10 Grams | 83,183.53 |
| Tola | 97,023.63 |
| Troy Ounce | 258,727.30 |
Global Market Movers: Gold price retains positive bias amid fears of a global recession
- Investors remain worried that US President Donald Trump’s latest trade tariffs would trigger an all-out global trade war and negatively impact the world economy. This, along with the emergence of fresh US Dollar selling, helps revive demand for the safe-haven precious metal during the Asian session on Tuesday.
- Market participants now seem convinced that the Federal Reserve will resume its rate-cutting cycle soon amid worries about the potential economic fallout from Trump's aggressive trade policies. Moreover, Trump called for the Fed to cut interest rates as soon as possible, arguing that the US economy was in a strong position.
- Fed Governor Adriana Kugler said on Monday that the US central bank's focus should be on keeping inflation in check and noted that short-term inflation expectations have risen but remain well-anchored in the longer term. She further added that Fed policymakers are still committed to the 2% inflation target.
- Separately, Chicago Fed President Austan Goolsbee said that a global trade war eruption may lead to a consumer behavior shift. If tariffs are as large as announced, with counter-tariffs, they could lead to supply disruptions, and high inflation, Goolsbee added further, though it does little to dent Fed rate cut expectations.
- In fact, the current market pricing indicated the possibility that the US central bank could again lower borrowing costs at the June policy meeting and deliver at least four rate cuts by the year-end. This fails to assist the USD in building on its recovery gains registered over the past two days and benefits the non-yielding Gold price.
- Traders will closely monitor minutes from the Fed's latest policy meeting, scheduled for release on Wednesday. Apart from this, the US Consumer Price Index on Thursday and the Producer Price Index on Friday should provide cues about the future rate-cut path. This, in turn, will influence the USD and the XAU/USD pair.
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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