Gold prices hit a new high of ₹89,796 per ten gram on the Multi Commodity Exchange (MCX) on Thursday, inching ever closer to the ₹90,000 milestone, adding to the gains the precious metal has seen over the last few months in the backdrop of the geopolitical tensions in parts of the world as well as the uncertainty around how the tariff wars will play out, since Donald Trump returned as US President and announced reciprocal tariffs on imports from multiple countries.
Silver prices, too, have been on the rise, scaling the ₹1 lakh per kilo mark this week. On Thursday, the metal, which is also widely used in various industries, touched ₹1,00,767 per kilo on the MCX.
Over the last few months, amid global uncertainties, investors have turned to precious metals as safe-haven assets. Central banks, too, have been buying a lot of gold, which is also adding to the firm prices.
“One of the key drivers behind the surge in gold and silver prices was the ongoing trade tension between the US and Europe. President Trump’s fresh tariff threats added further volatility to the markets,” said analysts at Motilal Oswal Financial Services, who advise keeping a “buy on dips” stance for gold and silver.
The latest escalation in the Middle East, Israel launching fresh strikes on Gaza and the US launching strikes on Yemen’s Houthi rebels is also adding to the pressures.
On Wednesday, the US Federal Reserve left its key interest rates on hold at 4.25-4.50 per cent. This was the second straight meeting following the FOMC meet in January that had left rates unchanged. Amid the tariff-related uncertainties, the Federal Reserve is expecting US economic growth to slow, while inflation will be higher this year, which will add to the uncertainties. Still, it is expected that the Fed will cut rates by 50 basis points by the end of 2025.
In the global market, gold has recently scaled the $3,000 per ounce peak and further hit an all-time high of $3,051.99 following the Fed meeting.
“We have entered a shallower rate cut cycle that continues to evolve with policies under the Trump regime and inflation expectations, which are now stickier than previously expected. Fed’s ability to cut rates will largely depend on tariffs and their repercussions on inflation,” said Ankita Pathak, fund manager – global equities, and macro strategist at Iconic Asset by Angel One. She has continued a positive bias toward precious metals.
The Federal Reserve is facing a delicate balancing act, as it attempts to manage inflation without triggering a slowdown, the Motilal Oswal analysts said.
“President Trump’s aggressive trade policies and the rollout of tariffs have led to uncertainty in markets and business sectors, exacerbating fears about the potential negative impact on economic growth,” they said.
Globally gold-backed ETFs (exchange-traded funds) have seen three consecutive months of strong global inflows, which, combined with an upward trending gold price, have lifted total assets under management (AUM) to $306 billion at the end of February, another month-end peak, according to World Gold Council.
The global uncertainties will also continue to support silver prices say analysts. While slower growth in China may be a near-term worry from the perspective of industrial demand for silver, the longer-term demand is likely to remain strong, especially from the renewable energy sector. Silver, for instance, is a crucial component in solar photovoltaic panels. It is also becoming key in electric vehicles, given its high electrical conductivity.