Rising gold prices fueled by economic concerns, geopolitical tensions, central bank rate cuts, and a weakening Indian rupee present an investment opportunity.
February 8, 2025: Gold prices have seen a significant surge in the past six weeks, with the MCX gold rate climbing from ₹76,544 to ₹84,900 per 10 gm, marking an increase of ₹8,356 or approximately 10.90%. This rally comes amid economic uncertainty, global geopolitical tensions, and weakening currency dynamics.
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Key Drivers of the Gold Price Rally
Economic and Geopolitical Factors
The uncertainty surrounding the global economy, coupled with the US President-elect Donald Trump’s trade policies, has driven demand for the yellow metal as a safe haven. Protectionist measures, including a 10% import tariff on China and threats of a 25% tariff on Mexico and Canada, have heightened fears of a trade war, further supporting gold prices.
Central Bank Rate Cuts
Several major central banks, including the Bank of England, European Central Bank, and the Reserve Bank of India, have implemented rate cuts, boosting gold’s appeal. Notably, the RBI recently reduced the repo rate to 6.25%, its first adjustment in five years.
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Weak US Jobs Data
In January 2025, the US economy added only 143,000 jobs, falling short of expectations. Consequently, the unemployment rate dropped to 4%, intensifying investor concerns about the US economy’s health and adding to gold’s allure.
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Expert Insights
Sugandha Sachdeva of SS WealthStreet highlighted the global demand for gold, which reached a record 4,974.5 metric tons in 2024, fueled by increased investment demand and central bank purchases. “While the technical structure indicates a positive bias, investors should be prepared for corrective waves,” she advised.
HDFC Securities’ Anuj Gupta emphasized that gold’s rally has been further supported by the weakening Indian rupee, which makes imports costlier, contributing to rising domestic prices.
Gold Price Outlook
Experts suggest that while gold prices may continue to rise, investors should monitor key support levels closely. A pullback could occur, with initial support around ₹83,800 per 10 gm and further levels at ₹83,300.
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Gold Price Rally, Economic Uncertainty, Central Bank Rate Cuts, Indian Rupee, Safe Haven Investment, US Unemployment, Trade War, Geopolitical Tensions, Gold Investment Tips, Global Gold Demand