Gold has once again reaffirmed its status as the ultimate safe-haven asset, soaring to an all-time high of $2,883 per ounce in the international spot market. The sharp uptick in prices is being attributed to heightened geopolitical tensions and trade war fears, particularly following US President Donald Trump's latest tariff threats. The ripple effect has been felt across global markets, with India's domestic gold prices mirroring the surge.

As of Wednesday evening, gold prices in local markets reached an unprecedented ₹85,000 per 10 grams (24K, excluding import duty and taxes), while in Delhi, spot prices hit ₹86,150 per 10 grams (excluding GST), according to HDFC Securities.

Trade Wars, Geopolitical Risks Fuel Gold's Rally

The uncertainty surrounding global trade policies and escalating geopolitical tensions have driven investors towards gold, traditionally viewed as a hedge against economic volatility. Saumil Gandhi of HDFC Securities highlighted that gold prices have seen a series of new highs since President Trump’s return to the White House, reinforcing the metal’s safe-haven appeal.

"Whenever there is uncertainty, the safe-haven value of gold goes up. Also, geopolitical tensions across the globe are not cooling down, giving gold’s safe-haven value a boost," added Avinash Gupta of the All India Gem & Jewellery Domestic Council.

Surendra Mehta of the Indian Bullion and Jewellers Association echoed similar sentiments, noting that prolonged trade wars and geopolitical instability are bound to drive inflation. This, in turn, strengthens gold’s position as a key hedge against economic instability. Mehta expects gold to breach the $3,050 per ounce mark in the coming months, with domestic prices forecasted to touch ₹89,000-₹92,000 per 10 grams in the next four to five months.

India’s Gold Demand: A Mixed Picture

Despite the surge in gold prices, India's overall gold demand saw a 5% increase in 2024, reaching 809 tonnes, driven by a reduction in import duty, strong investment demand, and festive purchases, according to Sachin Jain, World Gold Council's Regional CEO (India).

However, jewellery demand volumes witnessed a slight dip of 2%, settling at approximately 563 tonnes for 2024. This decline in jewellery consumption highlights the impact of rising gold prices on consumer sentiment, especially in a price-sensitive market like India.