Gold glows in uncertainty, poised for third straight monthly rise on trade war fears | Stock Market News

Gold prices are set to end another month higher as global trade tensions, initiated by US President Donald Trump, show no signs of cooling, as he keeps imposing tariffs on major industries, driving investors towards safe-haven assets. The latest blow was the announcement of a 25% tariff on automobile imports to the US, just ahead of reciprocal tariffs expected to be revealed next week.

Uncertainty surrounding the scale of reciprocal tariffs, the possibility of retaliatory measures from trading partners, and the potential ripple effects on the global economy and businesses have kept investors on edge over the past month, prompting them to safeguard their wealth in the yellow metal, which has long been considered a safe-haven asset during times of economic turmoil.

Safe-haven demand pushes gold toward a 3-month win streak

Against this backdrop, prices are set to end in green this month as they have already gained 7.12%, following a 2.15% rise in February and 6.62% in January, taking the year-to-date gains (spot) to 17.11%, marking the highest three-month surge since January 2016, when it jumped 16.22%.

On the domestic front, prices have surged from ₹84,511 per 10 grams to ₹88,384 so far this month, marking a 4.95% gain. Prices touched a fresh record high of ₹89,796 on March 20.

Gold ended the previous calendar year with a 27% gain, and in just the first three months of this year, it has already achieved 70% of that gain. Spot gold prices have remained above the $3,000 mark since breaching that level in mid-March, and in the previous trading session, they touched another record high of $3,074 after Trump threatened to impose “far larger” tariffs on the European Union and Canada if they work together to combat trade tariffs.

Investors have been expressing their discomfort with Trump’s trade policies by offloading equities at a rapid pace over the past two months, causing the S&P 500 to enter correction territory this month.

Trade tensions have also fueled fears that the US economy might slip into recession, with the latest economic data reinforcing those concerns. Trump has not ruled out a recession, instead describing the current economic phase as a “period of transition.”

Additionally, gold accumulation by major central banks, particularly China, which extended its purchases to a fourth consecutive month in February is supporting the metal’s rally.

Escalating global trade tensions have prompted analysts to lower growth forecasts for the world’s largest economy while also leading to a reduction in the S&P 500’s target price, with the latest being Barclays, which has revised the S&P 500 target downward from 6,600 to 5,900 points.

Reflecting the cautious sentiment, a survey revealed a decline in optimism among top business executives in the first quarter. In anticipation of tariff-induced price hikes, businesses scrambled to build up inventories. Data showed that orders for durable US-manufactured goods saw an unexpected increase last month.

US consumer confidence also dimmed further in March as the view of future conditions fell to the lowest level in more than a decade, the Conference Board reported Tuesday.

Gold’s record rally prompts analysts to hike targets

Amid the sustained rally, the yellow metal is also surpassing analysts’ target price earlier than expected, prompting them to revise their projections higher. Global brokerage firm Macquarie recently updated its 2025 gold price forecast and now expects the precious metal to reach $3,500 an ounce by the third quarter.

Goldman Sachs has also raised its year-end forecast to $3,300 per ounce from $3,100, citing stronger-than-expected ETF inflows and sustained central bank buying.

Investors are now closely monitoring Friday’s US Personal Consumption Expenditures data for insights into future interest rate moves, as gold tends to perform well in a low-rate environment.

Disclaimer: The views and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before taking any investment decisions.