Gold prices experienced a notable increase of over 2% during Monday’s trading session, largely fueled by the weakening of the dollar and robust demand in the spot market. As investors remained vigilant regarding the ongoing US-China trade tensions, MCX Gold contracts for June 5 surged 2.14%, reaching ₹94,615 per 10 grams by around 4:50 PM.
Global Gold Prices Rise Amid Trade Uncertainty
International gold prices also climbed more than 1%, with traders focusing on the upcoming developments in US-China trade negotiations as well as the Federal Reserve’s policy decisions expected on Wednesday. The dollar index faced a decline of nearly 0.5%, driven by concerns about a potential recession in the United States, which weighed heavily on the currency’s strength.
- Key Highlights:
- Gold prices soared due to a weaker dollar.
- Strong demand for gold in the spot market.
- MCX Gold contracts peaked at ₹94,615.
Economic Indicators Impacting Gold Demand
Recent economic reports indicate that the US GDP contracted at an annualized rate of 0.3% in the first quarter of 2025. Additionally, the manufacturing sector has shown signs of weakness, with the ISM’s manufacturing PMI falling to a five-month low of 48.7 in April, down from 49.0 in March. A declining dollar generally makes gold more affordable for foreign investors, thereby boosting its demand.
- Economic Indicators:
- US GDP: -0.3% annualized rate (Q1 2025).
- ISM Manufacturing PMI: Dropped to 48.7.
Focus on Federal Reserve’s Upcoming Decisions
While the trade discussions between the United States and China remain critical factors influencing gold prices, attention is also shifting towards what the Federal Reserve will reveal regarding its economic forecasts and future interest rate paths. Analysts anticipate that the Fed will likely maintain its current interest rates during the upcoming meeting.
On a related note, US President Donald Trump stated on Sunday that the US is engaging in discussions with multiple countries, including China, to finalize trade agreements, emphasizing his goal of achieving a fair deal with China.
This evolving situation continues to influence market dynamics, so stay tuned for more updates as they unfold.
