Gold prices could rise by over 16% in the next 18 months, potentially reaching $3,500 per ounce, according to a report from BofA Global Research. The report indicates that a 10% increase in non-commercial purchases could push prices to new heights. Even a modest 1% increase in investment demand could elevate gold prices to an average of $3,000 per ounce in 2025.

Several factors could contribute to this surge, including a rise in investment demand, particularly from China’s insurance industry, which can allocate up to 1% of its assets in gold. This move could account for nearly 6% of the total annual gold market. Additionally, central banks around the world, which currently hold about 10% of their reserves in gold, may increase their holdings to over 30% to enhance the efficiency of their portfolios. Such a shift could significantly increase global gold demand.

The report also points to the growing role of retail investors, with assets in physically backed gold ETFs rising by 4% year-on-year across key global markets, including the Americas, Europe, and Asia. Economic uncertainties and market volatility are driving more individual investors to seek exposure to gold.

Other factors, such as uncertainty surrounding U.S. trade policies and concerns over America’s fiscal and trade deficits, could weaken the U.S. dollar, further propelling gold prices in the near term. As investment demand continues to rise, the BofA report suggests that gold prices may remain strong in the coming months.

US President Donald Trump plans to implement reciprocal tariffs on all countries, countering previous speculation of targeting only 10 to 15 nations. These tariffs aim to rebalance trade and support US manufacturing, although specifics on affected countries and tariff calculations remain unclear.US President Donald Trump announced that he plans to begin his reciprocal tariff strategy with “all countries,” dismissing speculation that the initial tariffs, set to be unveiled on April 2, would target only 10 to 15 nations.

He has pledged to impose reciprocal tariffs on countries that levy fees on U.S. exports, aiming to match their duties. In February, Trump signed a memorandum instructing U.S. trade officials to craft customised countermeasures for each targeted country.

A hike in US tariffs that could adversely affect Indias  already-struggling diamond and jewellery sectors. India’s exports of gems and jewelry particularly studded gold jewelry and cut and polished diamonds will be largely impacted. A sudden tariff hike could severely impact exports, putting thousands of livelihoods at risk.

In 2024, India’s key exports to the US included precious and semi-precious stones (USD 5.3 billion), gold and other precious metal jewellery (USD 3.2 billion).India’s imports from the US included  cut and polished diamonds (USD 2.6 billion),  and gold (USD 1.3 billion).

US spot silver  reached a five-month high of $34.58 before experiencing a significant pullback towards the $34.00 level. This suggests profit-taking by traders and a reduction in exposure ahead of potentially volatile US macroeconomic releases.

The price action indicates a breach of the initial support level at $34.23, the March 18 peak. This breach signals potential for further downward momentum.Traders are exhibiting caution, likely due to the anticipation of upcoming US economic data, which could significantly impact the US Dollar and, consequently, the price of silver.

Key Support and Resistance Levels:Support: $34.23 (breached), $33.51 (March 26 daily low), $33.00.Resistance: $34.25, $34.58 (YTD high), $35.00.

The recent price action suggests a shift in short-term momentum from bullish to bearish.A daily close below $34.23 is a critical indicator of potential further downside.The next support levels at $33.51 and $33.00 are crucial for determining the extent of the pullback.Conversely, if XAG/USD manages to hold above $34.25, it could signal a resumption of the bullish trend, with the YTD high of $34.58 and the $35.00 level as potential targets.

US Macroeconomic Data: Upcoming US economic releases will be a significant driver of XAG/USD price action. These releases will influence the strength of the US Dollar, which has an inverse relationship with silver prices.Trader Positioning: The recent pullback suggests traders are unwinding long positions and reducing risk exposure.

Gold Price Correlation: Silver often exhibits a strong correlation with gold prices. Movements in gold will likely influence XAG/USD.Global Economic Uncertainty: Ongoing global economic uncertainty, including geopolitical tensions, can drive safe-haven demand for precious metals like silver.