Gold has surged for seven consecutive weeks

Gold, which has seen a sharp rally, continues to shine bright amid the continued global economic and trade uncertainties fuelled by import tariffs imposed on several countries and products by US President Donald Trump and worries that more tariffs may be on their way.

Gold has traditionally been a safe haven asset with investors globally turning to the precious metal in uncertain times.

Amid gold rallying in international market, prices in the domestic market continue to rise as well. The depreciation in the rupee to the US dollar only adds to that.

Friday's close marked the seventh consecutive weekly gain for gold prices in the domestic market.

On the MCX (multicommodity exchange), gold has gone up 11 per cent from around Rs 77,456 per 10 gram on December 31, 2024 to Rs 86,020 per 10 gram on February 21.

In the international market, gold price topped $2,954 an ounce. A new concern that has now emerged is potential tariffs on imports from Europe into USA. Several major banks have gold stored in vaults in London, which is a major trading location for physical gold.

Amid worries of tariffs on Europe imports, gold prices in London have dropped around $20, and reports indicate banks like JP Morgan and HSBC have begun shifting billions of dollars worth gold to New York, where demand has been high in the futures market.

The trade-related uncertainties are expected to keep gold in demand. Lower interest rates too make gold attractive.

Between September and December 2024, the US Federal Reserve slashed its benchmark interest rate by 1 per cent. The Fed has since hit a pause on interest rates amid re-emerging inflation risks.

As such, global central banks have been stocking up on gold for some time now and that also has been a supporting factor for gold prices. Central banks acquired 1,045 tonnes of gold in 2024, marking the third consecutive year of purchases surpassing 1,000 tonnes, Ventura pointed out.

Amid all this, gold prices are now expected to top $3,000 in international markets. Goldman Sachs has raised its forecast for 2025 year-end to $3,100 per ounce, up from $2,890 earlier.

If safe haven demand remains high and should there be an increase in speculative positioning again, then gold could easily go to $3,300 by the end of 2025, Thomas added.

In the domestic market, the high prices have some what dented jewellery demand, but investment demand has remained high. Gold ETFs in India saw net inflows of Rs 3,751.42 crore in January 2025, the highest every monthly net inflows, data from Association of Mutual Funds of India showed. These inflows were significantly higher than the Rs 640 crore in net inflows seen in December 2024.

The World Gold Council noted that the Reserve Bank of India had also stepped up gold buying, with the share of gold in its reserves steadily climbing to 11.31 per cent by early February 2025 from 7.7 per cent in January 2024.

Mehta of Abans sees gold rallying towards Rs 88,500 per ten gram, with further upside potential.