Gold breaches ₹1-lakh mark as greenback index slides on tariff pressure

Gold costs on Tuesday soared above the psychological mark of ₹1 lakh per 10 grams for the primary time ever because the U.S. greenback continued to slip amid treasury bond sell-offs and tariff associated uncertainties.

The spot value of gold was quoted at ₹1,01,245 for twenty-four carat per 10 gram, whereas the gold future was proved at ₹99,000 per 10 grams.

The spike mirrors the rally in gold costs throughout the first wave of COVID, when it had breached the ₹50,000-mark for the primary time in July 2020, as the worldwide economic system contracted, on weaker greenback and provide chain disruptions-led commerce headwinds, in line with analysts.

For India, the second largest gold client, principally by family patrons, adopted by China, this eye-popping value stage is important.

This yr, gold costs have surged 30% and the rally has sustained for 128 weeks, indicating additional rise until some readability is established.

Renisha Chainani, Head, Analysis at Augmont mentioned, “Gold has crossed the psychological stage of $3,500 an oz because the greenback fell to a three-year low beneath 98. President Trump elevated strain on the Federal Reserve, calling for a dramatic fee discount and even contemplating changing Chair Powell.”

“Trump criticised Fed Chair Jerome Powell once more on Monday, warning that the U.S. economic system will sluggish until rates of interest are lower promptly,” she mentioned. The feedback on Mr. Powell bolstered issues concerning the Fed’s independence in establishing financial coverage, in addition to the outlook for U.S. property.

“Moreover, amidst the commerce warfare, China accused the U.S. of abusing tariffs and warned governments to not search an settlement with the U.S. that compromised Beijing’s pursuits. Collectively, these concerns have led to sturdy safe-haven demand for gold, which is now up 30% this yr,” she added.

Stating that the gold value rally would proceed Anitha Rangan, economist, Equirus Securities, mentioned the rally could be pushed by reserve accumulation, geo-political uncertainty and comparability of previous rallies.

“Gold as a proportion of reserves is the very best now [since 2000], and has seen a significant enhance since 2021. Whereas we now have not had geopolitical conflicts like now within the final three many years, the peaks of 12–13% as of 2021 had been additionally seen in 2000 and 2011. However since 2019, from 12%, it has climbed to greater than 18% in 2024. In 2011, reserve construct could possibly be a driver, however 2000 onwards, the height which sustained was not led by reserve construct,” she mentioned on the reserve accumulation issue.

On the geo-political uncertainty she mentioned, “Uncertainty all the time results in gold as a protected haven. With the U.S. probably dropping its standing because the protected haven (greenback decline, US treasury yields climbing increased), and no decision to the U.S.-China tariff wars, uncertainty might linger for longer.”

Emphasising that the present rally has sustained for 128 weeks, she mentioned previous rallies (since 1975), apart from 1983 which lasted solely 34 weeks, have lasted between 146–241 weeks. “So this rally has extra legs to go. This time, it’s each reserves plus uncertainty driving the rally. I might conclude that maybe gold might have extra legs on this rally—not less than till uncertainty simmers down. As soon as we see some indicators of uncertainty really fizzling out, we might anticipate the gold [price] climb to halt,” she said.

“The short-term outlook on gold will stay sturdy if commerce pressure escalates between the U.S. and China. Nevertheless, long-term outlook stays bullish, supported by sturdy central financial institution purchases and geopolitical uncertainties,” mentioned Satish Dondapati, fund supervisor, Kotak Mahindra Asset Administration Firm.