Gold price hits two-week high on safe-haven demand. US Fed rate cut, Donald Trump’s 2.0 policies in focus | Stock Market News

Gold rate today: The yellow metal continued to shine at the onset of the new year, building on its impressive performance in 2024. After delivering over 20 per cent return in the domestic market in 2024, gold prices witnessed buying interest last week and ended around 0.74 per cent higher in the international market. The gold futures contract on the Multi Commodity Exchange (MCX) for February 2025 finished at ₹77,320 per 10 gm, whereas the spot gold price ended at $2,639.49 per troy ounce on Friday.

Safe-haven demand

Speaking on the triggers that fueled gold prices last week, Sugandha Sachdeva, Founder of SS WealthStreet, said, “The recent surge in gold prices has been primarily driven by its appeal as a safe-haven asset amid escalating geopolitical tensions in the Middle East and growing global economic uncertainties. These concerns are heightened as markets anticipate potential policy shifts under President-elect Donald Trump, who is set to take office on January 20. Expectations of significant economic changes under the new administration, including the possibility of trade disputes, have reignited fears, adding to gold’s demand.”

Russia launched a drone strike on Kyiv early on Wednesday, causing damage in at least two districts, while the Israeli military struck a suburb of Gaza City.

“I can’t see anything market-moving in the news, but geopolitical forces (international tensions as well as financial uncertainties, not less ahead of the inauguration of President-elect Trump) are supportive,” said StoneX analyst Rhona O’Connell O’Connell in an email to Reuters.

Central Banks’Banks’ gold buying

“Central banks have actively increased their gold holdings, further supporting the bullish sentiment. According to the World Gold Council, central banks purchased around 740 tonnes of gold in the first 10 months of 2024 as a hedge against uncertainties and a strategy for reserve diversification,” said Sugandha Sachdeva, adding, “However, gold’s upward momentum has been tempered by a strengthening US dollar. The dollar index surged for the 6th consecutive week. A stronger dollar, now at a two-year high, makes gold more expensive for holders of other currencies, effectively capping its gains.”

Trump 2.0 factor

Regarding how Donald Trump’s re-election as the US president would impact the gold price movement in 2025, Prithviraj Kothari, National President at India Bullion and Jewellers Association (IBJA), said, “Trump 2.0 could have nuanced impacts on gold prices. His administration’s policies, including tariffs and a strong preference for protectionist trade measures, could bolster the US dollar. A stronger dollar typically poses a short-term challenge for gold, making the metal more expensive in other currencies.”

The MD of RiddiSiddhi Bullions Limited added, “Donald Trump’s tenure also brings heightened geopolitical and economic uncertainty, historically supporting gold demand. Trade tensions, potential conflicts, and unpredictable policies under his leadership might drive investors toward gold as a safe-haven asset. Thus, while a stronger dollar might pose headwinds, the overarching climate of uncertainty could offset these effects, maintaining gold’s appeal. The net impact will largely depend on the balance between these competing factors.”

Gold rate today: Triggers to watch

On primary triggers that may dominate gold prices in the near term, Sugandha Sachdeva said, “FOMC meeting minutes, Non-Farm Employment Change, and the U.S. unemployment rate scheduled next week will likely lead to significant volatility in gold prices.”

Asked about the gold price outlook in the near term, Sugandha Sachdeva said, “We don’t foresee significant strength in gold in the near term unless prices in the international market can sustain above the $2,665 per ounce mark. In that scenario, we expect prices to move toward their next resistance level of $2,695 per ounce. However, if prices fail to sustain strength, the metal looks primed to test levels of around $2,585 per ounce. Gold in the domestic markets can stretch its gaining streak for the third straight week if it convincingly surpasses the ₹78,000 per 10 gm mark. Otherwise, prices will likely witness supply pressure at higher levels and succumb to profit booking.”

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.