Gold remains in the news cycle due to the latest rally in its prices. On Monday, international gold prices reached yet another high, surpassing USD 3,400 per ounce.
On the Multi Commodity Exchange of India (MCX), prices are heading towards Rs 97,000 per 10 grams, touching a new high.
The uncertainties surrounding Trump’s reciprocal tariffs plan and counter-tariffs have come as a shot in the arm to international gold prices, which have been moving northward for a considerable period. Analysts believe that safe-haven gold will remain elevated in the event of a possible escalation in the trade war.
Publicly available data showed that gold prices rose at an unprecedented pace in 2025, soaring over 20 per cent. Over the past year, they have risen about 40 per cent.
Central Banks and Safe-Haven Demand Fuel the Rally
This sharp rally is attributed to a combination of heightened geopolitical risks, trade tensions — particularly between the U.S. and China — and a surge in safe-haven demand from both institutional and retail investors, according to Motilal Oswal Financial Services Ltd (MOFSL) in a report released last week.
With the global economy navigating through policy uncertainty and slowing growth, gold is likely to remain an attractive asset class, Motilal Oswal added.
According to a report from Tata Mutual Fund, central banks’ increasing purchases of gold are expected to continue providing support to gold prices going forward.
Tariff Uncertainty and Dollar Weakness Add to Gold’s Momentum
“With the Trump administration favouring a weaker dollar and the uncertain effect of tariffs, this could serve as an additional tailwind for gold,” Tata Mutual Fund said.
Furthermore, it also asserted that trade disputes and recessionary fears resulting from the Trump administration’s uncertain and ad hoc tariff policy have led investors to seek refuge in gold.
What lies ahead?
According to the Tata Mutual Fund report, gold prices are expected to remain firm in the medium term due to central banks’ buying, anticipated rate cuts, a weaker dollar, inflation, economic uncertainty arising from tariff uncertainty, ETF inflows, and geopolitical factors.
“While short-term corrections are possible as gold prices have rallied more than 25 per cent in the past 6 weeks, historically this has taken 3-5 months, long-term fundamentals remain supportive,” it added.
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