Navigating a Bullion Market Transformed by Global Turbulence
Gold Hits Lifetime High above $3,000 and ₹89700/10g on MCX as Safe-Haven Demand Soars Amid Trade War, Central Bank Buying & Rate Cut Bets
Gold prices have surged to a record high, breaching the psychological $3,000 mark, while on MCX, prices settled at ₹89700 per 10 grams. The rally is driven by economic uncertainty, geopolitical risks, and strong central bank purchases. The ongoing U.S.-China trade war, coupled with Trump’s 200% tariff threats on European imports, has intensified safe-haven demand. Over the past year, gold has gained sharply amid global economic instability, concerns over equity valuations, and a shift by central banks away from dollar-based reserves. Since the West sanctioned Russia for its invasion of Ukraine, central banks have aggressively increased gold holdings, with Poland (90T), Turkey (75T), and India (73T) leading purchases in 2024.
At $3,000, gold has already hit the 2025 price target set by us. Additionally, fears of renewed U.S. inflation, slowing economic growth, a weaker U.S. dollar (DXY below 104), and declining 10-year Treasury yields (4.27%) further support the metal’s bullish outlook. The Federal Reserve is expected to cut interest rates at least three times this year, adding to gold’s appeal. However, if trade tensions ease, the U.S. dollar strengthens, or rate cuts are postponed, gold may face corrections. Despite expected volatility, we forecast gold reaching ₹92,000 per 10 grams in 2025, with short-term pullbacks amid shifting market conditions.
Top Reasons Supporting Gold Prices:
1. Escalating Trade War & Tariff Uncertainty – Trump’s 200% tariff threat on European alcohol, new levies on China, and retaliatory measures fuel economic instability, driving gold’s safe-haven appeal.
2. Record Central Bank Gold Accumulation – Central banks continue aggressive gold purchases in 2024 and are likely to increase their holdings in 2025, particularly in China.
3. Federal Reserve Rate Cut Expectations – Markets anticipate at least three Fed rate cuts in 2025, lowering borrowing costs and increasing gold’s attractiveness as a non-yielding asset.
4. Physical Gold Shortage & Supply Chain Disruptions – Over 151 tons of gold were withdrawn from London to New York in January alone, tightening physical supply and delaying deliveries.
5. Weakening U.S. Dollar & Declining Treasury Yields – The U.S. 10-year Treasury yield has dropped to 4.27%, while the Dollar Index (DXY) remains below 104, making gold a more attractive alternative.
6. Geopolitical Risks & Global Uncertainty – Ongoing Russia-Ukraine tensions, U.S.-China trade disputes, and Iran’s aggressive gold stockpiling (+300% YoY) are fueling demand.
7. Strong Physical Demand & ETF Inflows – Comex vaults now hold 1,250 tonnes of physical gold, while gold-backed ETFs recorded a 15% increase in inflows in 2024.
8. Inflationary Pressures & Currency Depreciation – While U.S. CPI cooled to 2.8%, tariffs and monetary easing could trigger inflationary pressures, further supporting gold as a hedge.
9. Stock Market Volatility & Recession Concerns – Major indices—Nifty (-16.29%), Dow Jones (-9.78%), S&P 500 (-10.48%), and Nasdaq (-14.07%)—continue to decline from recent highs amid slowing economic growth concerns.
10. Massive Gold Stockpiling by Governments – Iran has converted 20% of its foreign reserves into gold, highlighting rising global demand for bullion as a reserve asset.
Top Factors That Could Trigger a Gold Price Correction:
1. Resolution of Trade War & Tariff Rollbacks – If the U.S. and China reach a trade deal and ease tariffs, gold’s safe-haven demand could decline sharply.
2. Strengthening U.S. Dollar & Higher Bond Yields – A rise in the U.S. Dollar Index (above 105) and 10-year Treasury yields (above 4.5%) could pressure gold prices.
3. Fewer or Delayed Fed Rate Cuts – If inflation remains stubborn or economic growth stabilizes, the Fed may hold rates higher for longer, reducing gold’s appeal.As the Fed postponed the rate Cut on 19/3/25
4. Stock Market Recovery & Risk-On Sentiment – A rebound in global equities could shift investor focus away from gold, leading to increased selling pressure.
5. Ceasefire in Ukraine – The U.S. has proposed a ceasefire in Ukraine, but further clarifications and conditions are needed before a resolution is reached. A peace deal could weaken gold’s geopolitical risk premium.
Gold Price Forecast for MCX to test ₹92,000 in 2025 Amid High Volatility:
Gold is expected to touch ₹92,000 on MCX in 2025, driven by record central bank purchases, a weakening U.S. dollar, and Federal Reserve rate cuts. A global trade war and inflation concerns will likely sustain bullish momentum. However, extreme volatility is expected, as a resolution of trade tensions, stronger economic data, or a Fed pause on rate cuts could trigger sharp corrections. As the Fed paused the rate cut on 19/3/25.
Conclusion.
From a technical perspective, current market oscillations suggest that certain hedging strategies—such as the use of option puts—may be employed, and the observation of defined support levels has attracted analytical attention.
Conversely, when examined through a fundamental lens, the long-term outlook for gold, silver, and copper remains robust, reflecting enduring intrinsic value and positive market sentiment.
Disclaimer: It is essential to underscore that this analysis is provided solely for informational purposes and should not be interpreted as an endorsement or recommendation to initiate any specific trading action. Consult with a qualified financial advisor prior to making any investment decisions.
