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On the global front, spot gold slipped 0.1% to $3,010.64 per ounce, while US gold futures remained steady at $3,015.00 per ounce as of early trading, as per Reuters report.
What factors are affecting gold prices?
Profit booking after record highs: Gold has witnessed a strong rally in 2025, driven by geopolitical tensions and central bank buying. However, Rahul Kalantri, VP Commodities, Mehta Equities, noted that recent gains led to some profit-taking, pulling prices lower.
Stronger US dollar and stock market rally: The US dollar index surged past 104, making gold more expensive for foreign buyers. At the same time, US stock markets hit three-week highs, reducing the demand for safe-haven assets like gold and silver.
Trade policy uncertainty: US President Donald Trump hinted at automobile tariffs but suggested some flexibility, calming investor concerns. This shift in rhetoric weakened the immediate appeal of gold as a hedge against trade uncertainties.
Federal Reserve’s interest rate stance: Atlanta Fed President Raphael Bostic stated that the Fed might cut rates only by 0.25% by year-end, indicating a slower-than-expected easing cycle. Lower interest rates typically boost gold demand, but delayed rate cuts limit short-term gains.
Outlook: Where is gold headed?
Kalantri pointed out that the downside remains limited due to ongoing global risks. The upcoming US reciprocal tariffs (effective April 2), tensions in the Middle East, and stalled Russia-Ukraine peace talks could keep gold supported.
Should you invest in gold?
Satish Dondapati, VP & Fund Manager, Kotak Mutual Fund, recommended maintaining 10-15% of an investment portfolio in gold and silver.
He emphasised that gold remains an effective hedge against inflation and market volatility.
While short-term fluctuations may persist, the long-term outlook for gold remains positive, driven by:
- Central bank purchases
- Geopolitical tensions
- Inflation concerns
- Potential US interest rate cuts
Investors should consider buying on dips and monitoring global events for better entry points.
–With Reuters inputs
First Published: Mar 25, 2025 10:36 AM IST
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