Gold prices have surged to record levels in India and globally, hitting new lifetime highs due to increasing geopolitical tensions, fears of stagflation, and a weakening US dollar. On April 17, 2025, the price of 24-karat gold in India reached ₹97,310 per 10 grams, marking a significant increase.
This rally in gold prices is primarily driven by growing concerns over global trade conflicts, particularly between the US and China. The ongoing tariff disputes and fears of a global recession have led investors to flock to gold as a safe-haven asset.
Factors Driving Gold’s Surge
Several factors are contributing to gold’s rise:
Weakening US Dollar: The US dollar index is experiencing a steep decline, which has made gold more attractive to international investors. As the dollar falls, gold becomes cheaper for holders of other currencies.
Trade War Fears: Renewed tariffs on Chinese goods, including duties as high as 245%, have added to market uncertainty. This has led to fears of economic instability, further driving demand for gold.
Central Bank Purchases: Central banks worldwide, especially in Asia, have been increasing their gold reserves. In 2024, global central banks added 1,037 tonnes of gold to their reserves, a significant shift away from the US dollar due to concerns over inflation and geopolitical risks.
Rising Recession Fears: Analysts predict a 45% chance of a US recession, with fears escalating due to weak economic indicators and volatility in US Treasury bonds. As interest rates soften, gold has become an increasingly popular store of value.
Geopolitical Tensions and Stagflation Risks
Further supporting gold’s rise is the global economic uncertainty, including fears of stagflation in the US. Federal Reserve Chairman Jerome Powell warned that the US could face a situation where inflation remains high even as economic growth slows. This has intensified gold’s role as a hedge against economic stagnation and rising prices.
Global geopolitical risks, such as tensions in the Middle East and Eastern Europe, are also contributing to a “risk-off” sentiment, pushing investors to seek the security of gold.
Technical Outlook for Gold
While the fundamentals remain strong, some analysts are cautioning that the gold rally may be nearing its peak. Technical indicators suggest resistance at ₹97,500 (approximately $3,330). Some experts predict a potential pullback if gold prices drop below $3,300 (₹95,500), with support levels seen around ₹94,850 and ₹93,750.
Despite these warnings, many experts believe that the absence of clear solutions to trade disputes and economic uncertainties means that gold will likely remain in demand in the short term.
Gold’s recent surge highlights the ongoing concerns about the global economic outlook. As fears of recession, inflation, and trade wars persist, gold continues to be a favored asset for investors seeking stability.
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