Gold Prices Skyrocket Amid Economic Uncertainty and Trade Policy Fears

Gold prices hit a record high of USD 2,859 an ounce, rising 37% in a year due to economic uncertainties and Trump's trade policies. Declining US bond yields and expected lower interest rates make gold attractive as a safe-haven asset. Investors eye Fed's upcoming policy decisions closely.

In a dramatic rally, gold prices have surged to a historic peak of USD 2,859 per ounce, marking a remarkable 37% increase over the past year. The spike is primarily attributed to investors flocking to safe-haven assets amidst global economic uncertainties. The decline in US Treasury bond yields further fuels this trend, strengthening gold's appeal as a secure investment choice.

Ajay Kedia, Director of Kedia Advisory, highlighted that the drop in bond yields paired with potential economic risks from former President Donald Trump's tariff proposals sentiment, as investors aim to safeguard their portfolios against unpredictable trade policies. The lower yields have diminished the opportunity cost of holding non-interest-bearing assets like gold, making it an attractive option during turbulent times.

Furthermore, speculations about lower US interest rates, coupled with easing inflationary pressures, add to gold's allure. Trump's call on the Federal Reserve to reduce interest rates, purporting that it would stimulate economic growth, aligns with these market expectations. Jateen Trivedi, VP Research Analyst at LKP Securities, noted that gold experienced a Rs 500 rise on MCX, driven by the anticipated import duty hikes following previous reductions. The divergence between Comex and MCX illustrates domestic gold's outperformance, suggesting key trends in investor behavior.

(With inputs from agencies.)