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Commodity futures

Gold Prices Correct as Geopolitical Uncertainties Subside

Strategic Insights

— 2 min read

The ongoing risk-on rally in global markets, sparked by a decrease in geopolitical and tariff-related uncertainties, has led to a correction in the price of gold, which is down approximately 6-7% from its all-time high of $3,500/ounce. In the domestic market, gold is currently trading at around Rs 93,000/10gm, down from Rs 1 lakh level about a month ago. The sluggish demand for gold in international markets is attributed to the wait-and-see stance of investors as initial reactions to the US credit rating fade, and hopes for a truce between Ukraine and Russia rise.

Key Takeaways:

  • Gold prices have corrected by 6-7% from their all-time high of $3,500/ounce due to the risk-on rally in global markets.
  • The domestic market price of gold is currently around Rs 93,000/10gm, down from Rs 1 lakh level about a month ago.
  • There are at least two fundamental reasons for the sluggish demand for gold in international markets: the wait-and-see stance of investors and the decline in economic and geopolitical uncertainties.
  • Renisha Chainani, head of research at Augmont, blames the correction in gold prices on the fading initial reaction to the US credit rating and the hope of a truce between Ukraine and Russia.
  • Gold prices also thrive on economic and geopolitical uncertainties, meaning a ceasefire between Russia and Ukraine will likely lead to a slide in the price of gold.
  • On MCX, gold futures for June delivery were trading at about Rs 93,800 mark, while in the spot market, it was trading at about Rs 93,000.
  • Early on Tuesday, in the international market, gold was trading below the $3,215 mark as investors focus shifted to potentially easing US-China trade tensions.
  • Gold prices scaled above the psychologically important Rs 1 lakh mark by the third week of April, following Trump's announcement of tariff-related policies for the world's largest market.

Statistics:

  • Gold prices have corrected by 6-7% from their all-time high of $3,500/ounce.
  • The domestic market price of gold is currently around Rs 93,000/10gm.
  • Gold futures for June delivery were trading at about Rs 93,800 mark on MCX.
  • Gold was trading below the $3,215 mark in the international market on Tuesday.
  • Gold prices scaled above the psychologically important Rs 1 lakh mark by the third week of April.

Sources:

  • Times News Network
  • Augmont, a gold trading platform (Renisha Chainani, head of research)
  • Kotak Securities
  • The Times of India (Trump's announcement of tariff-related policies for the world's largest market)

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