Gold price soared to another record high on March 19, surpassing ₹90,000 per 10 grams in India.
One of the key drivers behind the surge in gold and silver prices was the ongoing trade tension between the US and Europe. President Trump’s fresh tariff threats added further volatility to the markets.
The US president threatened to impose tariffs of up to 200 percent on European alcoholic beverages, including wines and champagnes, in retaliation for the European Union’s decision to impose a 50 percent levy on American whiskey. This move was seen as a response to Trump’s tariffs on imported steel and aluminium.
“In addition to the geopolitical tensions, the soft US inflation data also played a critical role in supporting the precious metals market. US inflation in February fell more than expected to 2.8 percent, below expectations of 2.9. This decline in inflation reinforced market expectations that the Federal Reserve might cut interest rates in the near future,” brokerage firm Motilal Oswal said in a report.
This week, market focus will be on key economic data releases, including US retail sales, the IIP, the Philly Fed Manufacturing Index, and a few housing related numbers, which could provide insight on overall economic growth.
According to market experts, the weak inflation data as well as the US economic concerns, gold and silver rallies reflect growing risks. The Fed’s actions will be a key driver of market sentiment in the near term, shaping global economic expectations.
“Investors are rushing to gold as trade tensions continue to take centre-stage, apart from technical factors at play. With the US dollar at a critical stage in the near term--though long term a downfall is expected if the US does undergo a recession at some stage--gold will likely find continuous supports in the meanwhile,” said Sandip Raichura of PL Broking and Distribution.
According to Motilal Oswal gold and silver both are likely to witness some consolidation. “After a sharp rally, both gold and silver could witness some consolidation; however, bias for both continues to remain on higher side. Investors could continue to keep a buy on dips stance for both metals,” the brokerage firm said.
(By arrangement with livemint.com)
