Mumbai: On April 3, gold prices hit an all-time high, with spot gold trading at USD 3,145.93 per ounce, up 0.4 per cent. It even touched USD 3,167.57 earlier in the session. US gold futures also rose to USD 3,170.70 per ounce.
In India, gold prices surged to Rs 89,350 per 10 grams, reflecting the global trend. This sharp rise is linked to increasing economic fears and investor demand for safe assets.
Why Are Gold Prices Rising?
The surge in gold prices is mainly due to economic uncertainty caused by the US’s new tariffs. Here are the key factors:
US Tariffs and Trade War
President Donald Trump’s announcement of aggressive tariffs, including a 10 per cent baseline on all imports and higher duties on key trading partners, intensified the global trade war. This move disrupted markets and made investors nervous.
Impact on Markets
The tariffs led to sharp falls in equity markets, pushing investors to seek safer investments like gold. The uncertainty around global trade and economic growth made gold a preferred choice.
Safe-Haven Demand and Central Bank Purchases
Gold is traditionally seen as a safe-haven asset during times of political and financial instability. In 2024 alone, gold prices have increased by over 19 per cent. Central banks worldwide have also boosted their gold reserves, further supporting the price surge.
Weakening US Dollar and Bond Yields
The US dollar and 10-year bond yields dropped to their lowest levels in over four years. This made gold more attractive because lower yields reduce the opportunity cost of holding gold instead of interest-bearing assets.
Economic Data and Federal Reserve’s Role
US private payrolls rose more than expected in March, but signs of a slowing labor market raised concerns. Investors are now watching the US non-farm payrolls report on April 4 for clues about the Federal Reserve’s next moves. If the Fed signals interest rate cuts, gold prices could rise even further.
What’s Next for Gold Investors?
Gold’s bullish trend is likely to continue due to ongoing geopolitical risks, economic uncertainties, and central bank policies. Investors looking to hedge against inflation and market volatility may find gold an effective strategy.
However, prices could face corrections based on upcoming economic data and Federal Reserve decisions. Long-term investors are advised to include gold in their portfolios for diversification, while short-term traders should closely monitor global economic developments.
