Gold prices jumped significantly in India on Thursday with 24-carat gold rising by Rs 750 to reach Rs 99,750 per 10 grams, as investors sought refuge in safe-haven assets amid growing economic concerns and geopolitical instability.
The precious metal's rise mirrors global trends, with World Gold Council showing that the international spot gold climbed 0.9 percent to $3,392.90 an ounce, while US gold futures saw a modest increase of 0.2 percent to $3,399.80. This upward movement followed the US Federal Reserve's decision to maintain current interest rates, coupled with warnings about inflation risks and weakening labour market conditions — factors that have strengthened market expectations for potential rate cuts if economic growth slows.
The Fed's cautious stance has bolstered gold's appeal as a hedging instrument. Gold's momentum received additional support from US President Donald Trump's firm position ahead of US-China trade negotiations, as he declined to any further tariff concessions. This stance has improved gold's status as a non-yielding, safe-haven asset during uncertain economic times.
Adding to market anxiety, tensions escalated after India carried out air strikes targeting terror camps in Pakistan and Pakistan-occupied-Kashmir on Wednesday.
Talking about how gold recovered its shine, Deveya Gaglani, Senior Research Analyst - Commodities at Axis Securities, says, "MCX Gold prices recovered sharply after a steep decline of more than 7 percent from the recent peak of Rs 99,300. Gold prices rallied nearly 5 percent this week ahead of the FOMC meeting, where the Federal Reserve held interest rates steady, as widely anticipated. However, the Fed expressed concerns over economic headwinds arising from tariff-related uncertainties and renewed caution regarding US-China trade negotiations. These developments reinforced gold's appeal as a safe-haven asset, prompting renewed interest and bargain buying from investors and traders who had previously missed the rally. The Indo-Pak tension may support gold prices at lower levels; however, it will not significantly affect them unless the current situation escalates into a full-fledged war."
The situation has market analysts and alerts on alert, with analysts saying any dip from current position can be seen as an opportunity to buy. Anindya Banerjee, SVP: Head of Research: Currency, Commodity & Interest Rates, Kotak Securities, opines, "In the near term, speculative froth in gold markets raises the risk of profit-taking and corrective pullbacks — particularly if the US dollar shows signs of strength. For instance, a move in the US Dollar Index (DXY) from the 100 to 105 level in the coming weeks could exert downward pressure on gold. Such pullbacks, however, should be viewed as buying opportunities from a portfolio diversification perspective."
The precious metal had previously reached a record high of $3,500.05 an ounce on April 22, with analysts suggesting further gains may be possible if global uncertainty continues to dominate markets.
Talking about what Indian investors can expect, Banerjee adds, "We expect gold prices in India to broadly remain within the Rs 90,000 to Rs 1,00,000 per 10 grams range over the next couple of months. As for domestic geopolitical developments, their impact on gold is likely to be temporary and will primarily be transmitted through the USD-INR exchange rate."
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