Gold prices retreat after profit-booking, but experts suggest ‘buy-on-dips’ as safe-haven demand stays strong due to Gaza tensions, Fed stance, and looming US tariff wars.
March 22, 2025: Gold prices slipped ₹2,000 from their all-time high on the MCX this week, falling to ₹87,785 per 10 gm after touching a record ₹89,796, driven by profit-booking and a strengthening rupee. In global markets, spot gold closed at $3,023.63 per ounce, after briefly reaching $3,057.50, marking a nearly 15% gain for 2025 so far.
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Despite the dip, analysts remain bullish on gold, citing strong safe-haven demand amid a mix of US recession concerns, geopolitical tensions in Gaza, and the US Federal Reserve’s dovish monetary stance.
🟡 Why Did Gold Rally So Strongly?
According to experts, the surge in gold prices was primarily fueled by:
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- Rising recession fears in the US
- Heightened geopolitical tensions in Gaza
- A weaker dollar index, supporting gold’s appeal
- Dovish guidance from central banks, including the US Fed and Bank of England
The Fed’s decision to hold rates at 4.25%–4.5%, while signaling two rate cuts this year, initially boosted gold. Lower interest rates make non-yielding assets like gold more attractive, Sachdeva added.
However, profit-booking kicked in late in the week as the US dollar rebounded and global risk sentiment slightly improved.
🔻 What Caused the Pullback?
Experts believe, the rupee’s strength pushed MCX gold below ₹88,100, triggering more selling pressure. On COMEX, gold dipped $5 after struggling to break above the key $3,050 resistance level. A mild correction is likely, with support expected around $2,950–$2,965 per ounce.
Other reasons for the retreat include:
- Improved US economic data, including lower jobless claims
- An unexpected rise in February’s home sales
- Growing doubts over the pace of Fed rate cuts
📉 Should You Buy the Dip?
Analysts suggest buying on dips, especially if gold approaches:
- ₹86,600 per 10 gm on MCX
- $3,000 to $2,950 per ounce in the spot market
Kotak Securities believes the downside is capped as safe-haven demand remains intact, with Trump’s tariff threats and Middle East instability supporting gold prices. Trump recently reiterated a broad tariff plan starting April 2, including 25% duties on imports from Mexico and Canada.
📊 What Will Drive Gold Next?
Key factors to watch in the upcoming week:
- US Q4 GDP figures
- February PCE Price Index (a key inflation gauge for the Fed)
- Manufacturing and Services PMI data
- Tariff developments from the US administration
As market volatility persists and central banks hold back on tightening, gold may remain a preferred asset class for risk-averse investors.
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