2 weeks ago
Gold prices fell on Monday (March 17), declining ₹122 to ₹87,869 per 10 grams in futures trade due to muted spot demand. On the Multi Commodity Exchange (MCX), gold contracts for April delivery dropped 0.14% in a turnover of 14,106 lots.
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Analysts attributed the decline to weak global cues.
However, in international markets, gold futures rose 0.20% to $2,990.17 per ounce in New York.
The recent rally saw gold breach the key $3,000 level last week, marking an all-time high.
Why did gold prices rally last week?
Manav Modi, Senior Analyst, Commodity Research at Motilal Oswal Financial Services, noted that gold surged due to fresh tariff threats from former US President Donald Trump and weaker inflation data.
Trump’s threat of 200% tariffs on European alcoholic beverages came after the EU imposed a 50% levy on American whiskey.
The escalating trade war, along with lower-than-expected U.S. inflation, reinforced expectations of a Federal Reserve rate cut.
The Fed will meet on March 18-19 to decide on interest rate policy, and investors are closely watching US retail sales data.
Long-term gold outlook
According to Axis Mutual Fund, gold prices have doubled over the past five years, driven by record central bank purchases exceeding 1,000 tons for the third consecutive year.
Inflation fears, geopolitical tensions, and economic uncertainty continue to push demand higher.
China remains a major buyer, with official reserves at 2,285 tons. After a six-month pause, China added 44 tons of gold in 2024.
The US budget resolution extending 2017 tax cuts could increase fiscal deficits, supporting higher gold prices.
However, if the Federal Reserve keeps interest rates stable, it could slow gold’s momentum.
Should you invest in gold now?
Gold remains a strong hedge against inflation and economic uncertainty. Analysts believe short-term fluctuations are likely, but long-term prospects remain bullish.
Investors should watch the Fed’s policy decision this week and global trade developments before making new allocations.
-With PTI inputs
