Gold Price Trends: A Downward Shift Amid Trade Tensions

In a surprising turn of events, gold futures on India’s Multi Commodity Exchange (MCX) plummeted by over ₹2,800, marking a decline of more than 2% on April 4, 2025. This sharp drop followed China’s announcement of a 34% retaliatory tariff on the United States, igniting fears of an intensifying trade conflict. As the market closed, June 2025 gold futures settled at ₹88,130, reflecting significant profit-taking amidst rising global trade tensions.

Impact of China’s Tariff Announcement

Following China’s tariff news, gold experienced a notable decrease of 2.17%, reaching ₹88,099 per 10 grams by 7:34 p.m. (IST). This marked a significant drop from the previous closing price of ₹90,057. Simultaneously, global spot gold prices fell by 2.4%, landing at $3,041.11 per ounce as investors rushed to liquidate their holdings during a downturn in stock markets.

• Key Figures:
  • Gold futures closed at ₹88,130
  • Spot gold prices down to $3,041.11 per ounce
  • A decline of 2.4% in global prices

Geopolitical Factors Affecting Gold Demand

Market analysts anticipate that gold prices may continue to face downward pressure as geopolitical tensions appear to be easing. This reduction in global uncertainty typically diminishes the demand for safe-haven assets like gold. Jateen Trivedi, Vice President of Research at LKP Securities, emphasized this sentiment, noting that the market had already adjusted to the tariff news.

Trivedi commented, "Profit booking was expected following the announcement of tariffs. The market had been anticipating these developments, making the sell-off a natural reaction." He further explained that with the tariff implications largely factored in, gold could see further declines, particularly as geopolitical issues in regions like Russia-Ukraine and the Middle East remain relatively calm.

Technical Insights on Gold Prices

From a technical standpoint, Trivedi indicated that gold prices on the Comex are facing significant resistance between $3,120 and $3,130. Meanwhile, immediate support is anticipated around $3,050 to $3,055. A breach below this support level could trigger heightened selling activity in the near future.

Domestic Gold Market Predictions

Sugandha Sachdeva, founder of SS WealthStreet, shared her insights on how global economic pressures are impacting domestic gold prices. She pointed out that the ongoing trade conflict has created obstacles for gold’s previous upward momentum.

"Despite the complexities in global trade, the exclusion of gold and silver from tariffs has alleviated some supply concerns, evidenced by rising Comex inventories," Sachdeva remarked. She noted that retail demand has diminished after a substantial 19% price increase in the past quarter. The inability of gold to maintain prices above $3,120 per ounce internationally and ₹88,800 per 10 grams domestically signals a potential reversal, with expectations of prices possibly dropping to ₹87,000 or even ₹84,000 in the near term.

Investor Sentiment and Market Dynamics

The recent sell-off in broader markets has prompted many investors to scale back their gold investments. Furthermore, a robust U.S. non-farm payrolls report for March has dampened speculations regarding aggressive interest rate cuts by the Federal Reserve this year. Rising concerns about inflation driven by tariffs are likely to dissuade the Fed from adopting a more lenient monetary policy, adding further downward pressure on gold prices.

As the global economic landscape continues to shift, investors should remain vigilant and closely monitor these developments to navigate the complex dynamics of the gold market effectively.