Gold prices update: What's driving surge in rates today
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The ongoing concerns surrounding US President Donald Trump’s trade policies, especially his plans for tariffs on imports from China and the European Union, have driven investors towards safe-haven assets like gold.
A lower dollar makes gold more attractive to foreign buyers, boosting its demand.
However, Trump’s policies, seen as potentially inflationary, could lead the Federal Reserve to keep interest rates high.
“A weaker dollar makes gold more attractive for foreign buyers. Gold is considered a safe investment during economic and geopolitical uncertainty. However, Trump has vowed to hit the European Union with tariffs and said his administration was discussing a 10% tariff on goods imported from China starting February 1. Gold’s appeal as an inflation hedge may be diminished if Trump’s policies, which are seen as inflationary, lead the Federal Reserve to maintain interest rates higher for longer. Higher interest rates dampen non-yielding gold’s appeal,” said Prathamesh Mallya, DVP- Research, Non-Agri Commodities and Currencies, Angel One.
Outlook and investment strategy
Analysts suggest that gold has strong support near ₹78,000 per 10 grams, offering potential buying opportunities on any dips.
Jateen Trivedi, VP Research Analyst at LKP Securities, points out that trade tensions, especially Trump’s tariff plans on imports from Mexico and Canada, could lead to further market volatility, continuing to fuel safe-haven buying in gold.
Gold remains a strong option for risk-averse investors, especially in uncertain times like these.
Investors should keep an eye on geopolitical developments and market trends for the best opportunities to invest in gold.
First Published: Jan 22, 2025 2:25 PM IST
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