Gold Prices Bounce Back: Should You Buy Now?
Gold Prices Rebound After US-China Trade Deal Optimism
Gold prices saw a bit of a rollercoaster ride on Tuesday, but ultimately ended the day higher. After dropping significantly following the US-China trade deal, the precious metal made a comeback on the MCX (Multi Commodity Exchange of India).
MCX Gold contracts rose by 1.22% to ₹94,031 per 10 grams, following a near 4% drop earlier in the day.
Why the Rollercoaster?
The initial dip in gold prices was driven by the news of the US-China trade deal, which eased global trade tensions and boosted investor confidence in equities. This led investors to shift away from safe-haven assets like gold. The deal involved substantial tariff reductions, with the US cutting tariffs on Chinese goods to 30% from 145% and China lowering tariffs on American products to 10% from 125%.
Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, explained, ‘Gold prices plunged sharply by approximately ₹4,000 to ₹92,500 on the MCX, following a significant de-escalation in global trade tensions… This announcement triggered a sharp rally in the dollar index, which surged above $101.50, eroding the appeal of gold as a safe-haven asset.’
Gold’s Performance and Future Prospects
However, despite the recent dip, gold has actually been a strong performer this year. According to the NSE Market Pulse report, gold has been the best-performing asset class in FY25, with a 41% return in USD terms and a 33% return in INR terms.
Global gold demand has hit a 15-year high of 4,974 tonnes, driven by a 25% surge in investment demand. Trivedi also pointed out that factors like eased geopolitical tensions between Russia and Ukraine and a ceasefire agreement between India and Pakistan further contributed to the profit-booking in gold.
Looking forward, Trivedi stated that gold faces immediate resistance in the ₹94,000– ₹95,000 range, with key support at ₹90,000. He added, ‘With safe-haven demand fading, further downside cannot be ruled out if global risk sentiment remains stable.’
Is it Time to Buy?
So, should you jump in on the gold market now? That depends on your individual investment strategy and risk tolerance. The recent volatility shows that gold prices can be influenced by global events.
