Gold price jumps ₹8350 in six weeks. Should you buy in this rally?

Gold rate today: Following the economic uncertainty of US President Donald Trump’s tariff rant and weakness in the Indian National Rupee (INR), the precious yellow metal remains a safe haven for investors for the next six successive weeks. MCX gold rate settled at ₹84,900 per 10 gm after climbing to a new peak of ₹85,279 per 10 gm. Gold price registered a weekly gain of over ₹2,500 per 10 gm whereas, in the last six weeks, the precious bullion has risen over ₹8350 per 10 gm (exact figure ₹84,900 – ₹76,544 = ₹8,356) or around 10.90 per cent. Gold prices remained consistent internationally, rising for six consecutive weeks to reach the $2,886 per ounce level in the spot markets.

Triggers for Gold Price Rally

On reasons that have been fueling gold prices for the last six successive weeks, Anuj Gupta, Head — Commodity & Currency at HDFC Securities, said, “Gold prices have been on an uptrend since the last week of December 2024. Initially, the trigger was the US Fed rate cut buzz, which got extra fodder ahead of the fast-approaching US President-elect Donald Trump’s inauguration as the 47th US President. In the international market, the economic uncertainty amid fear of trade war due to Donald Trump’s protectionist policy also enabled the precious yellow metal to remain a safe-haven. In the domestic market, weakness in the Indian Rupee added extra fuel to the rising gold prices.”

Explaining the role of various triggering in continuous gold price rally, Sugandha Sachdeva, Founder of SS WealthStreet, said, “The recent surge in gold prices can largely be attributed to the safe haven demand as Trump administration imposed 10% import tariffs on China and threatened to levy 25% import tariffs on Mexico and Canada. These three are the US’s top trading partners, accounting for 40% of total goods trade, valued at almost $2 trillion. China too retaliated with its tariffs and other export control measures, raising concerns about escalation in the US-Sino trade war.”

President Trump has also announced his plans to impose tariffs on several other countries next week. Rising economic uncertainty is boosting the appeal of gold.

Geopolitical Tension in the Middle East

Sugandha Sachdeva noted that concerns over US President Donald Trump’s comments regarding plans for the Gaza Strip have raised worries about geopolitical risks in the Middle East region. This has also supported the gold price rally in recent sessions.

Rate Cuts by Central Banks

“Gold has also got a boost from recent rate cuts by major central banks. Bank of England extended its rate cut for the third consecutive time by 25 basis points to 4.50% in the last six months. European Central Bank also reduced its rates by 25 basis points to 2.75%. Bank of Canada also reduced its rate by 25 basis points. Additionally, the Reserve Bank of India has cut rates after five years, adjusting the repo rate to 6.25% from the long-standing 6.5%,” Sugandha Sachdeva said.

The SS WealthStreet expert said the recent World Gold Council report has added further shine to the yellow metal. The report suggested global demand rose by 1% to a record 4,974.5 metric tons in 2024 amid higher investment demand and increased purchases by central banks.

Weak US Unemployment Data

Pointing towards economic uncertainty, Anuj Gupta of HDFC Securities said, “The US unemployment rate has hit its lowest since May 2024 as the US economy could add only 1,43,000 jobs in January 2025, while the market expectations were 1,69,000. Hence, the US unemployment rate fell to 4 per cent against 4.10 per cent of the market estimates. This disappointing US job data has put further doubt into investors’ minds about the US economy.”

Gold price outlook

Expecting further rise in gold prices, Sugandha Sachdeva said, “Technical structure suggests an overall positive bias in gold prices, yet some corrective waves could be seen. Given that prices have approached the upper end of the Bollinger band and RSI is signalling an overbought condition, a pullback could ensue. Initial support could be found at around ₹83,800 per 10 gm. If this level is breached, further declines toward ₹83,300 per 10 gm mark could be seen.”

On the suggestion to gold investors in the current rally, Sugandha Sachdeva said that while gold has numerous conducive factors supporting its current highs, investors should be mindful of potential corrections and monitor key support levels closely.

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 investment decisions, as market conditions can change rapidly, and individual circumstances may vary.