Gold prices witnessed a sharp rise on June 2, aided by global geopolitical tensions and renewed US-China tariff tensions. The yellow metal's August contracts on the Multi Commodity Exchange of India (MCX) closed at Rs 97,210 per 10 gram today, marking a jump of 1.4 percent (a rise of Rs 1,335 per 10 gram) in just one session.
Fresh positions built up by investors led to a rise in gold prices, according to analysts cited by PTI. Notably, the gold futures with August expiry have now risen nearly 10 percent from the April-low of Rs 88,368 per 10 gram. On MCX, gold’s spot market price stood at Rs 96,430 per 10 gram.
Global gold prices also saw a sharp increase as ongoing tariff uncertainty, escalating geopolitical tensions between Russia and Ukraine, and conflicts in the Middle East sharpened the demand for safe haven assets like gold.
"Gold reacted sharply to renewed geopolitical tensions, as Ukraine launched retaliatory strikes following intensified Russian offensives. This escalation triggered safe-haven buying, lifting Comex gold by $50 to $3,350 and MCX gold by Rs 1,300 to Rs 97,250," said Jateen Trivedi, VP Research Analyst of Commodity and Currency at LKP Securities.
"This week's focus shifts to key macroeconomic indicators including U.S. Manufacturing PMI, Non-Farm Payrolls, Unemployment Rate, and speeches from Fed Chair Jerome Powell. With safe-haven momentum returning and a heavy data calendar ahead, gold may look to test the $3,400 level," Trivedi added.
Deveya Gaglani, Senior Research Analyst of Commodities at Axis Securities, meanwhile said, "This week will be eventful for bullion prices, and we expect some volatility as the market awaits Russia's response. We also have the Fed Chairman’s speech today, ISM manufacturing data, and non-farm payroll data, which may move prices significantly."
Earlier last week, US President Donald Trump took to social media to say that China has "totally violated" a trade agreement which was concluded weeks ago by the two countries. China retaliated by accusing US of violating their trade deal and vowing to take strong measures to defend its interests. The Chinese Ministry of Commerce issued a statement on June 2, rebuking the US president’s claims.
Further, Ukraine launched its largest drone attack on Russia after the Vladimir Putin-led nation deployed 472 drone and unmanned aircraft against Ukrainian targets on Sunday — the largest single-day drone strike since Moscow's full-scale invasion began in February 2022. The escalations come just a day before officials from the two countries were allegedly scheduled to meet in Istanbul for talks and negotiations.
The rising tariff jitters and geopolitical tensions have hiked investors' concerns about markets. India Vix spiked nearly 7 percent to 17.15. Gold, which offers a safe haven opportunity to investors as it mostly dodges the market fluctuations, seemingly benefitted from the concerns.
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