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Informist, Wednesday, Jun. 4, 2025

 

By Ashutosh Pati

 

MUMBAI – Renewed fears over protracted global trade tensions, the intensifying Russia-Ukraine war and rising US government debt are likely to support the safe-haven appeal of gold and keep prices firm in June, analysts said. However, easing trade tensions between the US and China and a peace deal in the Ukraine war could trigger a minor correction in gold prices, making it an opportunity for investors to buy the precious metal, they said.

 

As per the median of estimates of nine broking firms polled by Informist, the August gold futures on the Multi Commodity Exchange of India are seen in the range of INR 94,000-INR 100,000 per 10 grams this month. On the COMEX, prices are seen at $3,230-$3,500 an ounce. At 1616 IST, the August gold futures contract was 0.5% higher at INR 97,027 per 10 grams on the MCX and 0.2% higher at $3,382.2 an ounce on the COMEX.

 

"Technically, gold has now broken above the downtrend from its Apr. 22 record high of $3,500, with that former resistance line now turning into support near $3,325," Ole Hansen, head of commodity strategy at Saxo Bank, said in a note to clients. "While we remain cautious about declaring an imminent charge to fresh all-time highs, the macro setup is shifting in favour of precious metals," Hansen added.

 

Gold prices surged on Monday because of a rise in safe-haven demand after Ukraine's drone attack on Russia and heightened trade tensions between the US and China after Trump announced a doubling of tariffs on aluminium and steel effective Wednesday. A fall in the dollar index to a near-four-week low had also supported prices, as a weaker greenback would make the dollar-denominated precious metal cheaper for buyers holding other currencies.

 

"Apart from the policy uncertainty in the US, the fundamental problem of rising deficits and unsustainable debt remains unresolved or rather amplified with Trump's 'one big beautiful Bill' which could add trillions of dollars to already burgeoning debt," said Chirag Mehta, chief investment officer at Quantum Asset Management. "This structural issue is the cornerstone of eroding confidence in the US economy and will lead to money fleeing US shores leading to a declining US dollar," Mehta added.

 

Hansen said protectionist trade policies by the US and rising political polarisation, which was once viewed as transitory, are increasingly seen as structural risks and are prompting sovereign wealth funds and institutional investors to rebalance away from overexposure to US equities and Treasuries. "This reallocation has already played a visible role in lifting gold prices, as investors seek insulation from mounting concerns around US fiscal sustainability," he added.

 

Trump's administration has now asked countries to put forward "their best offer on trade negotiations" by Wednesday as officials seek to hasten bilateral talks with multiple trading partners, Reuters reported.

 

"If trade tensions ease and global stability gradually improves, gold may undergo short-term corrections. Savvy investors should view these fluctuations as entry points to gradually build their gold positions, positioning themselves for long-term resilience amid ongoing uncertainty," Mehta added.

 

Apart from geopolitical and trade tensions, the ongoing gold purchases by global central banks are also driving the momentum in gold prices. According to the World Gold Council, global central banks bought 12 tonnes of the precious metal in April, down 12% from a month ago. The National Bank of Poland continued to be the largest central bank buyer of gold in April, taking its reserves to 509 tonnes, WGC said. The Czech National Bank added 3 tonnes, taking its reserves to 59 tonnes. People's Bank of China increased its gold reserves by 2 tonnes in April to 2,294 tonnes.

 

"…the de-dollarization is the primary source behind gold prices moving higher because the central banks have been accumulating gold, diversifying away from the dollar rapidly through official and unofficial means. And institutions too have been accumulating physical gold substantially," said Anindya Banerjee - senior vice-president, commodity currency, Kotak Securities.

 

Following is the summary of the poll by Informist on gold prices in June 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	95,000	98,500	3,250	3,400
Kedia Comtrade	91,600	101,000	3,220	3,500
Kotak Securities	94,000	100,000	3,300	3,400
LKP Securities	94,000	100,000	3,200	3,500
Motilal Oswal Financial Services	92,500	102,000	3,170	3,500
Nirmal Bang	94,500	102,000	3,230	3,500
Prithvi Finmart	94,400	100,000	3,200	3,500
Reliance Securities	92,000	99,500	3,275	3,500
Ventura Securities	95,700	100,000	3,270	3,475
Median	94,000	100,000	3,230	3,500

 

End

 

US$1 = INR 85.90

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

With inputs from J. Navya Sruthi

Edited by Deepshikha Bhardwaj

 

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