On August 8, gold prices in India created history. October futures gold on Multi Commodity Exchange (MCX) reached ₹ 1,02,250 per 10 grams. This is the highest level ever. At the same time, gold is also spreading in the international market. The December futures on Comex reached $ 3,534 an ounce, which is very close to a record of $ 3,544 in April. The spot price in the US market has reached a height of two weeks.
What is the reason behind the increase?
Analysts believe that there are stress in the ongoing trade talks between India and the US, and a potential cut of 25 basis points in interest rates by the US Federal Reserve in October, the major cause of gold boom. Commodity and currency research head Jatin Trivedi of LKP Securities says that gold will remain strong unless there is concrete progress in the conversation.
He said that if the price comes below ₹ 99,500, then there will be a possibility of big selling. Till then every decline is a chance to shop for investors. Trivedi hopes that gold will fluctuate in the range of ₹ 99,500 to ₹ 1,03,000 in the coming times.
Trump’s tariff decision increased shine
Another major reason for the rise in gold prices is the tariff decision of US President Donald Trump. The US has imposed a duty on the import of 1 kg and 100 ounce gold bars, which has strengthened prices. It has the biggest impact on Switzerland, which is the world’s largest gold refining center.
The Trump administration has imposed 39% tariff on gold coming from Switzerland. Since Comex is the highest trading at 1 kg bar, this decision is directly affecting prices. In addition, the market is also expected to reduce US interest rates in September 0.25%. Gold shopping from China is also supporting the boom. In July, China purchased gold nine consecutive months.
Where can sleep reach by the end of the year?
Metals Focus Principal Consultant (South Asia) Chirag Sheth says that new news is being affected every day on the gold market. Gold in the US market with Trump’s tariff is being sold at $ 100 premium compared to London gold.
The US imports 220-250 tonnes of gold every year, out of which 60-70% comes from Switzerland. First this gold would go from London to Switzerland, would be converted to the bar and then sent to America. Now due to the tariff, there is a possibility that LME gold should be sent directly to America. There are also two LBMA refinery in the US. Sheth estimates that if the current situation continues, gold prices can reach $ 3,600 to $ 3,800 per ounce by the end of the year.