Metals shine as gold, silver prices soar on India-US trade deal

• US-India trade deal boosts stocks, rupee, and precious metals after tariff cuts
• Gold and silver prices rebound due to sentiment and lower safe-haven demand.
• Stronger rupee, better trade ties may temporarily limit gold and silver prices.

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The US–India trade deal has triggered a sentiment-led market response, with stocks rallying, the rupee strengthening, and gold and silver prices recovering after tariffs were reduced from 25 percent to 18 percent.

The domestic futures price of gold jumped nearly 5 per cent to Rs 1,51,176 per ounce, silver was up around 9 percent to Rs 2,57,394, and even copper prices surged 5.5 percent on MCX on February 3, as of 12 pm IST. Precious metal prices are rising, even as geopolitical risks—from US-China frictions and Middle East tensions to debt worries, central bank buying, and the rate-cut cycle—remain in play.

In early trade, the Sensex advanced 5.14 percent to reach 4,205.27 points to an intraday high of 85,871.73, while the broader Nifty surged to 26,341.20, up 1,252.8 points or 5 percent.

Overall, the trade deal between the US and India has strengthened the rupee, appreciating just above 1 percent to 90.33 against the US dollar on Wednesday (12:10 pm IST), marking its strongest single-day rise in over three years.

What India-US trade deal means for gold and silver

Indian Bullion Jewellers Association, National Secretary, Surendra Mehta, said, “Gold and silver will have no impact,” when asked about the significance of the US-India trade deal on these precious metals.

Even the customs duties remain the same for Indian travellers. Currently, import of gold in all forms attracts a 6 percent duty, including 5 percent BCD and 1 percent AIDC. Silver imports attract 6 percent customs duty for eligible Indian residents, while others pay 36 percent. Both metals attract a uniform GST of 3 percent.

Commodity analysts believe the impact of the US-India trade deal is more from a sentiment perspective than a structural one.

“Yes, the US–India trade deal can have an impact on gold and silver, but more from a sentiment perspective than a structural one,” said Jateen Trivedi, VP Research Analyst (Commodity and Currency) at LKP Securities.

"While the tariff reduction may slow down fear-driven buying, both gold and silver are likely to stay structurally firm as long as economic and policy uncertainty remains," said Ross Maxwell, Global Strategy Operations Lead, VT Markets

Trivedi reasons that the reduction in tariffs between the two nations improves global trade confidence and reduces risk premiums in financial markets. Whenever trade tensions ease, safe-haven demand for gold and silver tends to soften because investors shift allocation toward risk assets like equities and growth sectors.

“So in the short term, it can trigger profit booking in bullion, especially after an extended rally,” said Trivedi.

The analyst warns that if the deal is limited in scope and broader geopolitical risks remain intact, the structural bullish case for gold and silver does not change materially. “In summary, the trade deal may cause temporary pressure or volatility, but unless it marks a broader global de-escalation cycle, it is unlikely to reverse the long-term bullish trend in precious metals,” said Trivedi.

Outlook: Will gold and silver continue the momentum? 

Gold and silver have rebounded nearly 10 percent from recent lows as markets factor in the absence of key US economic data due to a partial government shutdown and renewed bargain hunting. The shutdown began after Congress failed to fund the Labour Department and other agencies, adding short-term uncertainty.

The Augmont Bullion report, published on February 3, noted that the sharp correction in precious metals, around 25 percent in gold and 45 percent in silver from recent highs, has attracted strong physical buying from investors who were waiting for meaningful price retracements to accumulate precious metals.

With USD-INR appreciating just above 1 percent toward 90.20 after the tariff cuts to 18 percent, the report stated that this has “Improved trade relations, reduced uncertainty and a stronger rupee may temporarily cap domestic gold and silver prices by easing safe-haven demand and lowering import costs, despite supportive long-term fundamentals.”

Furthermore, gold prices may extend the ongoing rebound toward $5,000 (Rs 1,55,000), with strong support seen near $4,600 (Rs 1,39,000), the report stated.