New Delhi: Gold prices have reached a record high of $2,859 per ounce (28.34 grams), reflecting a significant increase of 37 percent over the past year.
This rise is attributed to investors seeking safe-haven assets amid economic uncertainties, particularly following a recent drop in US Treasury bond yields and apprehensions regarding trade policies proposed by former US President Donald Trump.
Ajay Kedia, Director of Kedia Advisory, noted that "The historic peak in gold prices is fueled by a recent decline in US Treasury bond yields and escalating concerns about potential economic risks stemming from former President Trump's tariff proposals. Investors are increasingly turning to gold as a safe-haven asset in light of the uncertainty surrounding future trade policies."
The decrease in US bond yields has enhanced the appeal of gold for investors, as lower yields diminish the opportunity cost associated with holding non-interest-bearing assets like gold. Concurrently, Trump's recent tariff proposals have heightened fears of trade disruptions, prompting investors to seek the security of precious metals.
Another significant factor contributing to the rise in gold prices is the anticipation of lower interest rates in the US. Trump has called on the Federal Reserve to reduce interest rates, asserting that lower borrowing costs would stimulate economic growth. Additionally, easing inflationary pressures in the US have led to speculation that the Fed may soon contemplate rate cuts.
Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, remarked that "Gold has shown positive movement, gaining Rs 500 to reach Rs 81,400 in MCX as participants brace for potential import duty increases, following a 6 percent reduction in the previous Budget. A notable divergence has been observed between Comex and MCX, with domestic gold surging 2.5 percent in the past week, while Comex only increased by 0.50 percent. In the domestic market, Rs 79,500 serves as a crucial support level, while Rs 82,000 represents the next significant resistance."
Gold is frequently regarded as a safeguard against inflation and economic uncertainty. As international markets respond to unpredictable trade policies and changing monetary outlooks, the demand for gold remains strong. Investors are paying close attention to forthcoming Federal Reserve policy announcements and significant economic indicators, as these factors may impact gold price trends in the near future.
