Gold prices fell slightly in Asian trading on Monday after hitting record highs in the previous days. Demand for gold as a safe haven continues amid uncertainty over trade tariffs and a slowing global economy. Geopolitical unrest in the Middle East has also increased demand for the precious metal.
Gold witnesses’ profit-taking after reaching record highs
Gold prices witnessed some profit-taking after reaching record highs above $3,000 per ounce. Spot gold fell to $2,982.80 per ounce, while gold futures fell 0.3% to $2,991.62 per ounce by 01:14 ET (05:14 GMT). Prices had reached an all-time high of $3,005.08 per ounce last Friday. Trade and Economic Tensions Boost XAU Strength
Former US President Trump reiterated his threats to impose reciprocal tariffs starting next April, a move that could escalate the global trade war. However, markets were uncertain about Trump’s seriousness in implementing these tariffs, especially after he had previously backed down from some positions.
However, the US was witnessing retaliatory measures from China, European Union, and Mexico, which threatened to further escalate tariffs. Concerns about potential inflation due to these tariffs also contributed to increased demand for gold as a safe haven.
Can bulls start bottom hunting without waiting for the stock market bottom?
The gold-to-Nifty ratio, currently in the 2.50-2.75 range, is a potential entry point for bullish investors looking for bottom hunting strategies. This ratio could signal an opportunity to initiate gradual buying, as markets fluctuate between caution and limited optimism.
Timing the Bottom: Difficult to Predict
According to the head of research for investment and securities, the unpredictable nature of the stock market makes it difficult to pinpoint the exact timing of a bottom. However, Jin believes that rather than waiting for a clear signal of a bottom, investors can rely on fundamental indicators to initiate momentum buying.
Gold price forecasts rise due to global economic conditions
Gold Price Fundamentals: Driven by Uncertainty
Despite the uncertainty surrounding the global economy, XAU fundamentals remain strong, especially given the prevailing inflationary pressures. However, demand for physical gold and XAU jewelry has declined slightly due to the recent surge in gold prices. However, gold traders continue to offer discounts to balance supply and demand, which could improve the market sentiment.
Anuj Gupta, Head of Commodities and Currencies at HDFC Securities, noted that gold prices have risen by around 15% since the beginning of the year, benefiting traders who maintain reserve stocks. Gupta added, “This could help mitigate the impact of the rise in gold prices, prompting investors to diversify their portfolios towards equity assets.”
Gold demand is expected to remain high as global economic uncertainty persists. In addition to trade tensions, fears of a recession in the United States are growing due to rising inflation and slowing economic growth. Several central bank meetings are scheduled this week, including those of the Federal Reserve, the Bank of Japan, and the Bank of England, which could lead to further volatility in financial markets.
Meanwhile, other precious metals saw mixed performance. Palladium futures rose 0.5% to $1,018 per ounce, while silver futures fell 0.3% to $34,328 per ounce. Silver had earlier reached a five-month high.
Copper Prices: Stabilized Amid Chinese Stimulus
As for industrial metals, copper prices stabilized following strong expectations of further economic stimulus measures in China. Beijing’s announcement of a package of measures to support domestic consumption boosted sentiment for copper, one of the world’s most traded industrial metals. Copper futures rose 0.1% to $9,805.40 per ton, while copper futures for May delivery settled at $4.8950 per pound.
Why is the price of gold rising?
Gold price forecast for 2025 indicates it will reach $4,000. An army of investors believes that XAU will continue to generate massive gains amid geopolitical and economic uncertainty. After gold recently reached unprecedented levels exceeding $3,000 per ounce, expectations have grown that it can reach even higher levels.
Gold is expected to reach $4,000 per ounce in the near future, based on increased purchases by central banks. This forecast is based on a potential economic recession in the United States and increased concerns about risky investments, which boost demand for gold as a safe haven.
2025 forecast: Gold will reach $4,000
Expectations of a rise in XAU prices are growing, with experts believing the precious metal will rise by an additional 35%. In December 2024, central banks recorded their highest level of XAU purchases in many years, as emerging markets increased their purchases to reduce their dependence on the US dollar. This surge in demand for XAU, coupled with concerns over the freezing of Russian assets and the trade war, strongly supports the price rally.
Positive Outlook for Gold in the Coming Year
Experts agree that XAU will remain in a strong position over the coming year. Central banks are expected to continue buying gold as part of their diversification strategies. With economic and geopolitical concerns lingering, prices will remain under increasing pressure to achieve sustained gains.
As uncertainty persists in global markets, demand for XAU as a safe haven is rising. Trade tensions, a potential economic recession, and geopolitical shifts are contributing to gold’s strong position in the markets.
Can Investors Start Buying Momentum?
Although predicting a market bottom remains a significant challenge, historical data suggests that the current nifty-to-gold ratio may present an opportunity for bullish investors to enter the market.
