The gold market is experiencing a notable shift as domestic futures showed a subdued performance this Tuesday morning. The recent US-China trade agreement has stirred investor enthusiasm for equities, leading to a decline in the allure of gold, traditionally viewed as a safe-haven asset. MCX Gold contracts recorded a 1.22% increase, reaching ₹94,031 per 10 grams, after dipping nearly 4% to ₹92,901 earlier in the day.

Gold Prices React to Trade Developments

The latest trade agreement between the United States and China has significantly influenced gold prices. The two economic giants agreed to reduce tariffs for a 90-day period following discussions in Geneva, Switzerland. Key outcomes include the US slashing tariffs on Chinese goods from 145% to 30%, while China reciprocated by lowering tariffs on American products from 125% to 10%.

• Gold prices saw a sharp decline, dropping around ₹4,000 to settle at ₹92,500 on the MCX.
• This drop came in response to the easing of trade tensions, with the dollar index soaring above $101.50, diminishing gold’s appeal as a secure investment.

Is This the Right Moment to Invest in Gold?

The NSE Market Pulse report indicates that gold has emerged as a leading asset class in FY25, boasting a remarkable 41% return in USD terms and 33% in INR terms. Global demand for gold has surged to a 15-year high, reaching 4,974 tonnes, largely driven by a 25% increase in investment demand.

Jateen Trivedi, VP Research Analyst at LKP Securities, noted that the easing of tariffs coincides with a decline in geopolitical tensions. There are encouraging signs of a potential truce between Russia and Ukraine, as well as a ceasefire agreement between India and Pakistan.

• These developments have resulted in significant profit-taking on gold, which had previously benefitted from market uncertainty.

Future Outlook for Gold Prices

Trivedi suggests that gold now faces immediate resistance in the ₹94,000–₹95,000 range, while the next crucial support level is at ₹90,000. He warns that if global risk sentiment remains stable, further declines in gold prices could be anticipated as safe-haven demand wanes.

As investors navigate these shifting dynamics, it raises the question: is now the time to buy gold? With fluctuating prices and evolving market conditions, staying informed is essential for making wise investment decisions.

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