US-India Trade Deal: Gold Prices Rise Over 5%, Silver Surges 13% On MCX

Gold prices surged on domestic markets following a rally in international markets. Silver prices surged, rebounding from earlier losses, with a sharp buying sentiment after Indian and the US announced a major trade agreement, which lowers the tariffs on Indian exports.

On the MCX, gold futures for April delivery surged 5.5 per cent to Rs. 1.48 lakh per 10 grams. Meanwhile , silver futures for March delivery jumped over 13 per cent to Rs. 2.46 lakh per kg.

The development on the trade frontier lifted investor sentiment after both the precious metals had seen a sharp correction. In international markets, too, some investors saw a good entry point after the fall. A key employment report for January was also delayed amid a partial shutdown of the federal government, which also led investors to step up investments in safe-haven assets.

A combination of factors played into investor sentiments, such as geopolitical uncertainty and concerns about the independence of the US Federal Reserve, among others. Investors had also sold precious metals after US President Donald Trump nominated Kevin Warsh as the next US Federal Reserve chair after Jerome Powell.

Despite the fall in precious metals prices in the recent session, gold prices have risen over 9 per cent in the past month, while silver has risen 12 per cent over the past month.

Meanwhile, in the domestic markets, investors looked towards the reduction of tariffs on Indian goods to 18 per cent from 25 per cent earlier. The US had imposed cumulative 50 per cent reciprocal tariffs on India, which included 25 per cent as a penalty for India’s Russian oil buys. But as it stands now, the punitive 25 per cent tariff has also been removed after India promised to stop buying Russian oil, and instead buy oil from America or Venezuela.

Market experts, however, caution that markets could remain choppy despite the surge in prices. Some questioned whether the sharp correction in precious metal prices was driven by structural factors or a temporary unwinding in positions.

"The drivers for bullion remain intact, suggesting the correction was largely due to short-term catalysts rather than a shift in long-term fundamentals,” Hareesh V, Head of Commodity Research at Geojit Investments, said. He said the gold and silver prices are also recovering due to the impact of a firmer dollar.