Donald Trump‘s tariff threats looming on the rest of the world, can gold’s haven appeal take a faster lane to hit the Rs 1 lakh milestone in the next few months? Here’s what the experts say!
To reach the Rs 1 lakh mark, gold prices have to still grow by Rs 14,000 or 16%. On Tuesday, gold hit a lifetime high of Rs 86,360 before closing the session at Rs 85,532.
While there is a consensus view that gold prices could remain on the up for next few months till the tariff saga unfolds itself further, a likelihood of Rs 1 lakh target to get hit is not foreseen by many experts.
While fresh highs are possible, reaching Rs 1 lakh in the next few months seems unlikely, said Naveen Mathur, Director- Commodities & Currencies, Anand Rathi Shares and Stock Brokers. He said that gold prices surge of 27% in 2024 and 11% so far in 2025 is largely driven by geopolitical tensions, central bank buying, and aggressive rate cut expectations.”This year’s rally has been fueled by Trump’s tariff uncertainty, pushing spot gold to a new high of $2,942.68/oz while Rs 86,360/10 gm for MCX gold futures,” Mathur said.
Concurring with the view, Anuj Gupta, Head Commodity & Currency at HDFC Securities said that his target till Diwali remains intact at Rs 87,000 as he ruled out the magic mark.
Historically, gold is seen as a hedge against global uncertainties like wars, economic downturns and inflation. Indian markets ended with deep cuts on Tuesday following US President Donald Trump’s hike of tariffs on steel and aluminum imports to a flat 25% “without exceptions or exemptions” increasing the risk of a multi-front trade war.Also Read: Trump policies: Reciprocal US tariffs loom on India’s auto, textile and a dozen other sectors
“If tariffs escalate, they could slow global growth and increase demand for gold. However, Trump’s pro-inflation policies may keep the Fed’s monetary stance hawkish, preventing aggressive rate cuts. This could cap gold’s upside and maintain market volatility,” Mathur said.
Augmont Goldtech in a note said that $3,000 is knocking on the door as investors are flocking to the safe-haven asset after he imposed new 25% tariffs on steel and aluminium imports, inflaming inflation and a potential trade war.
“Gold has crossed another psychological level of $2,950 (Rs 86,000 on MCX) and now we may see strength towards a very important psychological level of $3,000 or Rs 87,500 on MCX,” Augmont noted.
Apurva Sheth, Head of Market Perspective and Research at Samco Securities shares a chart which it refers to as ‘Samshots’ which is a ratio chart of MCX Gold to CNX 500 (Nifty 500). The chart shows how gold has outperformed equities and it is in “no mood of stopping”. In February 2024, Samco had recommended adding gold in one’s portfolio when the ratio was around 3 and currently it is trading above 4 levels.
“In the past, this ratio has moved up to levels of 7 during Covid period. We did a what-if scenario analysis for gold and CNX 500 prices if the same levels were to hit this time around too. If CNX 500 stays at current levels and gold prices move up further, then the upper limit for gold works out as Rs 1,48,071 per 10 gms,” Sheth said with a caveat that it was just a “wild” scenario.
ETMarkets.comGold, which is a global commodity, will track the international prices and the domestic prices will also depend upon INR’s movement against the US dollar.
Gupta sees rupee depreciation as a big factor on how domestic gold prices move, going forward. “Gold has fallen by nearly 50% in the last 10 years and around 3-4% in 2024 and if the INR weakens further the landing cost would become higher making gold expensive,” he explained.
Fed watch
Global streets will keep an eye on US Federal Reserve’s Chair Jerome Powell’s testimony before the US Congress. The hearings began on Tuesday and later today, he will testify before the House Financial Services Committee. This panel is now under Republican control with new chairs just like the Senate Banking Committee.
What should investors do?
Gold has witnessed a one-sided rally and thus possible correction towards R 83,500 can be seen, Mathur of Anand Rathi said, recommending that the short-term traders should take advantage of volatility with a buy-on-dips approach, while long-term investors should remain invested as gold continues to be a hedge against uncertainty.
“However, given market dynamics, portfolio diversification remains key, and investors should maintain a balanced mix of gold, equities, and debt. A Staggered investment approach with a 10-12 % allocation in Gold is recommended for a balanced portfolio,” this analyst said.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)