International News
Gold declines and investors opt for dollar, prioritize liquidity
Gold, often considered the quintessential safe-haven asset, witnessed a notable retreat on Monday, slipping over 2% from last week’s record highs. This downturn came as investors, rattled by escalating trade tensions between the U.S. and China, shifted their focus towards the U.S. dollar and other safe-haven currencies like the Swiss Franc and Japanese Yen. The move reflects a broader market recalibration in the face of renewed economic and geopolitical uncertainties.
Spot gold prices fell by 2.4%, settling at $2,963.19 an ounce by early afternoon ET. During the session, the precious metal touched a near four-week low of $2,955.89. Meanwhile, U.S. gold futures also closed 2% lower at $2,973.60. This decline follows an all-time high of $3,167.57 reached just last Thursday, underscoring the volatility gripping the commodities market.
Investor sentiment shifted in favor of the U.S. dollar, which rebounded from a six-month low. A stronger dollar makes gold more expensive for holders of other currencies, putting downward pressure on its price. This change in preference indicates that, during times of acute uncertainty, investors may prioritize liquidity and ease of access — qualities traditionally associated with the dollar — over long-term value storage like gold.
The gold market is currently experiencing significant stress, largely driven by liquidity concerns and speculative activity. According to Bart Melek, head of commodity strategies at TD Securities, margin covering by traders — the need to cover losses on leveraged positions — has added to gold’s downward pressure. This phenomenon typically accelerates declines as investors sell assets to raise cash.
The primary catalyst for the market turmoil is the intensification of the U.S.-China trade conflict. President Donald Trump has floated the possibility of imposing a 50% tariff on Chinese imports if Beijing fails to roll back its own retaliatory tariffs. Meanwhile, speculation that the U.S. administration might pause tariffs for 90 days on all nations except China was dismissed by the White House as “fake news,” adding to the confusion and uncertainty.
Despite the short-term dip in gold, the broader macroeconomic backdrop continues to support a bullish outlook for the precious metal. Futures markets are now pricing in approximately 120 basis points of rate cuts from the U.S. Federal Reserve by the end of the year. The probability of a rate cut as early as May has also risen to 37%. Lower interest rates reduce the opportunity cost of holding non-yielding assets like gold, thereby boosting their attractiveness.
Analysts remain optimistic about gold’s long-term potential. The metal continues to benefit from robust central bank demand and remains a favored hedge during periods of financial instability and geopolitical strain. The recent correction may be seen more as a pause or consolidation phase rather than a reversal of trend, particularly given the fragile state of the global economy.
There was a modest decline in gold prices during the early European trading session on Friday. Following a sharp rally that saw the precious metal reach an all-time high of $3,358 per ounce, the price of gold has edged lower, largely attributed to profit-taking behavior by investors ahead of the long Easter weekend.
Despite this short-term dip, several underlying factors continue to reinforce gold’s appeal as a safe-haven asset. Foremost among these is the growing uncertainty surrounding U.S. trade policy, particularly with regard to import tariffs proposed by President Donald Trump. Additionally, broader concerns about a potential recession and persistent geopolitical tensions add to investor unease, prompting many to maintain positions in historically secure assets like gold.
Meanwhile, the trajectory of U.S. monetary policy remains a key influence on gold prices. Federal Reserve Chair Jerome Powell has recently adopted a more hawkish tone, signaling diminished prospects for a rate cut in June. This shift suggests a tightening of monetary policy, which could strengthen the U.S. dollar and, in turn, place downward pressure on gold, which is priced in USD. Powell’s comments also underscore the challenging balance the Fed faces: while inflation remains elevated, economic growth appears to be softening—conditions that could give rise to a stag-flationary scenario.
Gold prices surged to an all-time high on Wednesday, breaching $3,300 an ounce in international spot markets for the first time as escalating U.S.-China trade tensions sent investors fleeing to traditional safe havens.
The yellow metal climbed to $3,318 per ounce in overseas trading, extending its recent rally and drawing closer to the symbolic ₹1,00,000 per 10 grams mark for 24-karat gold in India. Domestically, prices mirrored the global trend: in Delhi, gold was quoted at ₹98,100 per 10 grams by evening, while June futures on the Multi Commodity Exchange (MCX) hit a record ₹95,435.
President Trump’s directive for a probe into critical minerals added to the market anxiety, reinforcing the rush toward safe haven assets.
The sharp price escalation, however, has chilled consumer demand in India—the world’s second-largest gold market—prompting local jewelers to sell at a discount to imported prices. Gold is currently trading at a 1–2% discount to its landing cost in Indian markets.
Meanwhile, silver has trailed the gold rally. International spot prices for the white metal hovered around $32.80 per ounce Wednesday, crossing ₹1,00,000 per kilogram in Delhi, but still lagging behind gold in terms of momentum.
For now, analysts expect gold’s bullish run to persist, fueled by geopolitical uncertainty, inflation concerns, and growing investor caution.
Gold prices have surged to an all-time high today, fueled by a lower dollar, trade war tensions, and concerns about global economic growth as a result of US President Donald Trump’s tariff plans, which prompted safe-haven inflows.
On Tuesday, President Trump ordered a probe into potential duties on all vital mineral imports, signalling a tougher stance on trade and potentially influencing relations with important suppliers, notably China.
This development somewhat negates the market relief provided by the recent exclusion of certain tech products from reciprocal tariffs, as well as the suggestion of possible exemptions for auto parts.
Increasing chances of a deeper recession, another turn in the geopolitical landscape, disruptions in global supply chains, and fears of increasing inflation coupled with a changing rate outlook suggest that gold will maintain its strong position in the near future.
Technical Triggers
As the gold active Jun contract has sustained above $3245, is expected to continue its bullish momentum to touch $3300 (~Rs 95000) and $3320 (~Rs 95500) going ahead.
Silver after achieving the target of $32 (~Rs 94000), we are likely to see this rally extending further towards $33 (Rs 95500) and beyond this week.
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