Gold prices edge higher on weak US dollar, Donald Trump’s tariff rant. Should you buy in this rally?

Gold price today: Following weakness in the US dollar rates and the economic uncertainty on Donald Trump's tariff rant, gold prices continued their uptrend during the early morning session on Monday. MCX gold rate today opened downside at ₹85,998 but soon caught momentum and touched an intraday high of ₹86,122 per 10 gm mark within a few minutes of the Opening Bell.

According to experts, the US dollar is still around a two-month low with negative bias maintained, and assets like equity, mutual funds, etc., reeling under Donald Trump's tariff barrier pressure; investors are looking at gold as a safe haven. That's why the MCX gold rate is ascending during morning deals despite logging weekly gain for the seventh straight week last Friday. They said that spot gold price is set to touch $3,000 per ounce mark in the near term and one can expect MCX gold rate to touch ₹87,200 in the near-term. 

Triggers for gold price

Speaking on the reasons that are fueling gold rates today, Sugandha Sachdeva, Founder of SS WealthStreet, said, “Gold price has emerged as one of the best-performing assets of the year, gaining for the eighth consecutive week in international markets and seven out of the last eight weeks in domestic markets. The precious metal soared to a new peak of Rs. 86,592/10gm before closing the week at Rs. 86,020/10gm, marking a 1.57% increase. In international markets, gold continued its upward trend, reaching a new high of $2,954.94 per ounce.”

The SS WealthStreet expert said several key factors have driven gold price rise since January. The tariff war initiated by the Trump administration, the recent weakness in the dollar index, geopolitical uncertainties, increased ETF inflows, and rate cuts by major central banks have all supported the yellow metal’s upward momentum.

Trump's tariff barrier

“The tariff dispute between the US and Europe has created uncertainties in global trade, impacting gold prices. There are concerns that the Trump administration may impose tariffs on gold following the recent 25% import tariffs on aluminium and steel. This anticipation has fueled demand in the US, pushing gold prices higher. While gold prices in the US and the UK typically move in tandem, the current price disparity has led major banks to transfer gold from London vaults to New York, capitalizing on higher prices. Banks like JP Morgan and HSBC have relocated gold reserves to New York, driving up US inventories since President Trump’s election. Reports indicate that nearly 2% of the Bank of England’s total gold reserves have been moved out of its vaults recently,” Sugandha added.

US dollar rates under pressure

Pointing towards the recent dip in the US dollar rates, Sugandha Sachdeva said, "The weakening dollar index has further supported gold prices, declining for the third straight week after reaching a high of 110.17 in mid-January. Looking ahead, gold prices are expected to maintain a positive bias in the coming week, although short-term dips cannot be ruled out. Any decline is likely to attract buying interest."

Gold price target

Expecting more upside in gold prices, Anuj Gupta, Head — Commodity & Currency at HDFC Securities, said, “The uptrend in gold prices are expected to sustain until some clarity comes on Donald Trump's tariff barriers. MCX's gold rate is expected to touch ₹87,200 per 10 gm in the near term, and any dips should be seen as a buying opportunity to maintain a stop loss below the ₹85,500 mark. In the international market, the spot gold price is set to touch $3,000 per ounce in the near term.”

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.