Gold Prices Surge to New Heights Driven by US-China Trade War and Weak Dollar
12 April 2025 – In the face of escalating tensions in the US-China trade war and a weakening US dollar, gold prices have surged dramatically, logging a weekly gain of 6.50%. This escalation has pushed the domestic gold price to new heights, with Multi Commodity Exchange (MCX) rates reaching ₹93,940 per 10 grams during Friday’s trading session.
Weekly Gains and Record Highs
The MCX gold rates settled at ₹93,887 per 10 grams, marking an impressive ₹5,757 increase from the previous week’s close of ₹88,130. This 6.53% weekly rise reflects broader trends in both domestic and international markets. Globally, the spot gold price soared to a record high of $3,245 per ounce before closing at $3,236.21, also registering a notable 6.41% increase over the week.
Factors Influencing the Gold Rally
Several factors have contributed to this remarkable surge in gold prices. Primarily, the intensifying trade conflict between the US and China has injected a significant amount of uncertainty into global markets. Market analysts attribute a portion of the gold rally to disruptions caused by US President Donald Trump’s recent unexpected policy shift regarding tariffs, which has increased tensions with China while leaving other tariff arrangements largely unchanged.
As a result, the US dollar index plummeted, falling below the critical 100 mark for the first time in two years, which further bolstered gold’s appeal. On Friday, the dollar index closed down 0.72% at 99.89, leading to increased investor interest in gold as a safe-haven asset.
Expert Commentary
Sugandha Sachdeva, founder of SS WealthStreet, highlighted that the "steep rally" over the past four trading sessions was driven substantially by geopolitical tensions and a weakening dollar. She noted, "The drop in the US Dollar Index to a multi-year low provided a powerful tailwind for Gold." Similarly, Jateen Trivedi, VP of Research — Commodity & Currency at LKP Securities, emphasized that ongoing trade conflicts have heightened uncertainty, propelling investors towards gold despite the appreciation of the Indian rupee.
The Future of Gold Prices
Market experts predict further increases in gold prices in light of ongoing geopolitical uncertainties. The outlook indicates potential targets of ₹95,000 to ₹95,500 per 10 grams domestically, and upward movements towards the $3,280 to $3,320 per ounce range internationally. With existing trends in the US economy, including suggestions of potential interest rate cuts by the Federal Reserve due to lower-than-expected consumer prices, gold’s attractiveness may further bolster its price trajectory.
Conclusion and Caution
While the momentum currently favors buyers, experts advise caution at these elevated price levels. Changes in the dynamics of US-China trade relations or a resurgence of the dollar could dampen gold’s appeal. Analysts emphasize the importance of remaining vigilant about shifting trade rhetoric and currency fluctuations as these will likely continue to drive gold prices in the near future.
As always, investors are urged to consider their individual risk tolerance and conduct thorough research before making investment decisions, as market conditions can change rapidly.
For ongoing updates and insights into market trends, stay tuned to Smart Money Mindset.
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