By Dr. Renisha Chainani, Head- Research, Augmont – Gold for all
Gold cleared the $3000 (~Rs 88000) milestone target driven by risk aversion. Gold closed the year 2024 at $2640 (~Rs 77800), and the “Gold and Silver Outlook—2025” yearly report recommended buying gold on 1st Jan 2025 for the target of $3000 in 2025. Gold prices have almost risen 14% y-t-d in 2025 in just 2.5 months since then, on Trump tariff uncertainty and its expected implications on the US economy and the whole world.
Softer Inflation
Traders increase their bet that the Federal Reserve will have to decrease interest rates more than expected this year due to the increased risk of an economic slump as a result of the Trump administration’s aggressive policies. This week’s milder US inflation data raised expectations.
According to data released on Wednesday, the headline US CPI climbed less than predicted in February, by 2.8% annually, down from 3% the previous month. Furthermore, the US PPI remained constant in February, and the annual rate fell to 3.2% from 3.7% in January. This pointed to signals of diminishing inflationary pressure in the United States, which, together with a cooling labour market, strengthens the Fed’s prospects for further easing.
Three FED rate cuts expected
Traders are currently pricing in three 25-basis point Fed rate reductions for the June, July, and October monetary policy meetings. This, in turn, is viewed as another factor supporting the non-yielding yellow metal, however, a combination of factors limits further advances.
Tit for Tat in tariff war
US President Donald Trump escalates the tariff fight, threatening to impose a 200% penalty on European wine and cognac imports unless the European Union lifts levies on US whiskey. Trump had already promised to respond to any actions outlined by the EU. This comes on top of Trump’s 25% tariff on all steel and aluminium imports, which went into effect on Wednesday, raising concerns about the possibility of a further escalation in the trade war between the US and its largest trading partner and sending the safe-haven gold price to a new record high on Friday.
Strong ETF and Central bank demand
Strong ETF demand and ongoing central bank buying also underpin the metal, with China increasing its purchases for the fourth straight month in February. Furthermore, Russian President Vladimir Putin voiced conditional support for a 30-day ceasefire proposed by the United States and Ukraine. This, combined with rumours that there will be enough Democratic votes to avoid a US government shutdown, bolsters investor confidence. Meanwhile, the US Dollar Index remains weak, down about 6% year to date in 2025.
Traders are currently anticipating the preliminary release of the Michigan US Consumer Sentiment and Inflation Expectations Index for short-term possibilities. The market’s emphasis will next move to the key two-day FOMC monetary policy meeting, which begins next Tuesday.
Gold Apr Futures Daily Chart
Gold closed the year 2024 at $2640 (~Rs 77800), and the “Gold and Silver Outlook—2025” yearly report recommended buying gold on 1st Jan 2025 for the target of $3000 in 2025. Gold after achieving the $3000 (Rs 88000) milestone, now is expected to extend this run up towards $3035 (Rs 88800) and $3080 (Rs 90000) in the coming weeks. After that, we can see some retracement and profit-booking, which can extend down to $2800 and $2700 maximum.
Silver May Futures Daily Chart
While Silver has also climbed above $34(~Rs 100,000) on strong demand, the next resistance for the prices is $35(~Rs 103,000).
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