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Informist, Friday, Apr. 4, 2025

 

By Sandeep Sinha

 

MUMBAI – Gold prices are likely to trade with a positive bias this month because of safe-haven demand as the reciprocal tariffs announced by US President Donald Trump on imports from other countries have increased fears of a global economic slowdown and reduced the risk appetite of investors. The positive momentum in gold will be supported by a sharp correction in the Dollar Index, gold purchases by central banks, and continued inflows in exchange-traded funds.

 

Trump Wednesday announced tariffs on imports into the country at rates much higher than expected by economists and analysts. This led to a sell-off in riskier assets as investors fear retaliatory tariffs by other nations, raising fears of recession in the US. A global trade war is positive for gold as it will lead to all-round demand destruction and contraction in the world economy.

 

The dollar index, which measures the strength of the greenback against a basket of six major currencies, has fallen 1.6?ter the tariff announcement. In March, the index fell 3.1%. A weaker greenback makes dollar-denominated commodities like gold cheaper for those holding other currencies, thus improving their demand.

 

"As gold prices rise, investment demand through exchange-traded funds and digital gold rises, partially offsetting the downturn in jewellery buying. Additionally, gold ETFs and digital gold have attracted buying given that investors are seeking a hedge against inflation and economic uncertainty. Central bank buying and global flows into gold-backed assets are also supporting demand," Prithviraj Kothari, managing director of RiddiSiddhi Bullions, said.

 

Gold holdings with SPDR Gold Trust, the world's largest gold-backed ETF, rose by 27.56 tonnes on month to 931.94 tonne in March. Gold stocks at COMEX warehouses rose 46.1 tonnes to 1,272.02 tonnes in March, the exchange data showed.

 

According to the World Gold Council's latest report, central banks bought 24 tonnes of gold in February. They had bought 18 tonnes in January, indicating robust appetite for bullion.

 

According to the median of estimates of 17 broking firms polled by Informist, June gold futures on the Multi Commodity Exchange of India are seen in the range of INR 87,500-INR 92,500 per 10 grams this month. On the COMEX, prices are seen at $3,010.0-$3,237.50 an ounce. At the time of writing, the June gold futures contract was at INR 89,480 per 10 grams on the MCX and $3,111.5 an ounce on the COMEX.

 

However, gold is susceptible to profit-taking at higher levels and a selloff in other asset classes may force traders and investors to liquidate their gold positions to provide margin calls. "(But) the sell-off should be short-lived, with escalating trade actions likely to continue to bolster safe-haven buying," ING Economics said in a report.

 

Money managers have cut their net long positions in COMEX gold by 1,670 lots to 192,687 as of Mar. 26, according to Commodity Futures Trading Commission data.

 

Ole Hansen, head of commodity strategy at Saxo Bank, said in a research note that a correction to $3,000 an ounce, let alone $2,960 an ounce, would not trigger any major alarm bells, given the outperformance in the past three months.

 

Kothari said India's gold demand will likely be affected in the short term by the record-breaking gold bull run. With domestic prices over INR 94,000 per 10 gm, affordability is becoming an issue, especially for jewellery buyers. Reports indicate that purchases of jewellery for weddings have fallen by 70-80% as consumers either delay or do not spend as much. "Gold demand will be under short-term pressure due to price inflation and macroeconomic uncertainty," he said.

 

Investors will keep a close eye on interest rate decisions of the Reserve Bank of India and the European Central Bank, US March non-farm payrolls data, US CPI and core personal consumption expenditure price index data for further cues.

 

Following is the summary of the poll by Informist on gold prices in April and details of estimates by respondents, in alphabetical order:

 

Brokerage	MCX support (INR/10 gm)	MCX resistance (INR/10 gm)	COMEX support ($/oz)	COMEX resistance ($/oz)
Axis Securities	88,000	90,700	3,040	3,140
Emkay Global	88,000	92,000	3,095	3,185
Finlit Consulting	86,000	92,000	3,050	3,250
HDFC Securities	86,600	92,700	2,880	3,270
ICICI Securities	85,000	95,000	2,980	3,300
JM Financial Services	89,250	92,700	3,050	3,250
Kedia Comtrade	88,500	92,200	3,020	3,280
Kotak Securities	87,700	93,500	3,035	3,267
LKP Securities	86,000	93,500	2,950	3,225
Mirae Asset Sharekhan	88,800	93,500	3,111	3,202
Motilal Oswal	89,000	92,150	--	--
Nirmal Bang	86,000	96,000	2,980	3,220
Prithvi Finmart	87,000	92,500	2,880	3,220
Religare Broking	87,300	93,200	3,000	3,260
Reliance Securities	87,500	91,500	3,000	3,200
RiddhiSiddhi	89,500	92,500	3,100	3,250
SMC Global	87,170	92,500	2,980	3,220
Median	87,500	92,500	3,010	3,237.5

 

End

 

US$1 = INR 85.23

 

Edited by Ashish Shirke

 

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