Gold Prices Hit New Record Highs Amid Rising Global Uncertainty, Surge Over 16 Per Cent YTD

The prices of gold have been on a sharp rise lately, reaching a fresh record high on Tuesday, March 18. On the Multi Commodity Exchange (MCX), April futures advanced by 0.73 per cent or Rs 649, setting an all-time high of Rs 88,672 per 10 grams. Meanwhile, in the international market, gold prices breached the $3,000 mark, hitting a lifetime high of $3,037.60 per ounce on COMEX.

Based on data from Yahoo Finance, as of March 18, gold has delivered a year-to-date (YTD) return of over 16 per cent. This sustained uptrend in gold prices has pushed gold’s global market capitalisation above the $20 trillion mark for the first time ever.

The sudden surge in gold prices has left investors questioning why the yellow metal's allure is growing.

Here’s Why Gold Prices Are Rising

Jateen Trivedi, VP Research Analyst - Commodity and Currency at LKP Securities, explained that the overall sentiment remains uncertain due to heightened geopolitical tensions. He pointed out that US President Donald Trump has pledged to continue US strikes on Yemen’s Houthis unless their attacks on the Red Sea stop. This instability in the Middle East, along with China’s plans for additional economic stimulus, has further boosted the demand for gold as a safe-haven asset.

Kaynat Chainwala, AVP-Commodity Research, Kotak Securities, adding to it, said, “Recently, Ukraine launched its largest drone attack on Moscow, the US carried out military strikes on Yemen, and Israel launched a series of military strikes across Gaza. These events have fueled safe-haven demand further, driving gold to record highs. Additionally, concerns over a potential trade conflict with key US trading partners are pushing traders toward gold.”

What Next?

Going ahead, Chainwala said, gold prices may be influenced by remarks from Fed Chair Jerome Powell and the Federal Open Market Committee's (FOMC) economic projections, which could provide new insights into the Fed's monetary policy trajectory.

“With the Fed signalling caution and traders growing more confident in a June rate cut following softer US inflation, the market will be closely watching how expectations evolve after the FOMC meeting. While the Fed is widely expected to hold rates steady in the upcoming meeting, a hawkish tone from Powell could dampen market expectations for multiple rate cuts, potentially leading to a pullback in gold prices. However, any sharp decline may be limited by signs of a US economic slowdown and ongoing tensions in the Middle East,” she said.

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