New Delhi, Feb 16 Gold is 11 per cent up so far in 2025, outperforming equities and bitcoins, according to industry reports, which project that the bullion is heading towards $3,000 per ounce and is likely to cross $3,080 in Q1 this year.
With the increased US trade tariffs there’s a lot of uncertainty surrounding the US trade policy. These have increased the demand for safe haven asset, said Ventura Securities.
Spot gold hit a record high of $2,943 and Comex gold $2,968 an ounce.
There are talks around about tariff on gold which also has sparked a rush for the physical metal in London, Switzerland and Asia to ship to the U.S. ahead of any new levy.
“Gold keeps trading at record highs on the back of increasing demand by central banks for their reserves to maintain an expected surge in fiscal deficits which could raise inflation manifold and probably a recessionary fear across the globe,” said the brokerage in a note.
Central banks acquired 1,045 tonnes of gold in 2024, marking the third consecutive year of purchases surpassing 1,000 tonnes. Over the last 3 years, central banks bought more gold than in 6 years before 2022.
“The recent strength stems from a mix of higher tariff safe haven demand, geopolitical uncertainties, inflation concerns, central bank policies besides continued strong demand from both central banks and retail investors,” the report mentioned.
All this, despite strength in bond yield and a strong dollar with US data indicating a solid US economy.
However, gold presently is pressured due to the strength in Treasury yields and Dollar bias after Federal Reserve Chair Jerome Powell has been cautious and flagged no hurry to cut interest rates.
Bigger gains in gold are restricted due to strength in USD and interest rates are still elevated. Since US importers are facing inflation due to tariffs, the FED has less impetus to cut interest rates. High interest rates present more pressure for non-yielding assets like gold.
Gold will continue to have volatility and so far as “uncertainty” prevails, its likely to remain bullish, the report mentioned.
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