Will Gold Prices Soar to Rs 1 Lakh After Trump’s Reciprocal Tariffs? Should You Invest? Experts Weigh In
Gold prices in India have been on a rapid upward trajectory, fueled by global economic concerns and new tariff policies introduced by Donald Trump. With prices already nearing Rs 91,115 per 10 grams, speculation is rife on whether the yellow metal will breach the Rs 1-lakh mark soon.
Gold Prices See Unprecedented Surge
The past month has seen gold prices surge by Rs 11,983 per 10 grams, marking a 7% increase from Rs 85,320 on March 2. This upward movement mirrors global trends, where spot gold recently surpassed $3,132.53 per ounce, even hitting an all-time high of $3,148.88 due to heightened economic concerns. Meanwhile, US gold futures also climbed by 0.4%, reaching $3,164.20 per ounce.
Will Gold Touch Rs 1 Lakh ?
With gold just Rs 9,000 away from the Rs 1-lakh threshold, a further 10% increase could make it a reality. Analysts attribute this possibility to multiple factors, including central bank buying, geopolitical instability, and Trump’s tariff strategy.
Colin Shah, MD of Kama Jewelry, believes that gold is on track to hit Rs 1 lakh by 2025, especially with two anticipated Federal Reserve rate cuts. He noted that gold, being a safe-haven asset, tends to attract significant investment during economic turbulence.
However, not all experts are convinced. Chintan Mehta, CEO of Abans Financial Services, argues that the current rally is an extension of previous trends rather than a fresh uptrend. According to him, most bullish factors have already been priced in, reducing the chances of gold surpassing Rs 1 lakh in 2025.
Kishore Narne of Motilal Oswal Financial Services takes a different stance, stating there is "no ceiling" for gold prices. He suggested that gold could reach anywhere between $4,000 and $4,500 per ounce in the long run.
Impact of US Tariffs on India’s Gold Jewellery Industry
The US is a significant market for India’s gold jewellery exports, accounting for 30% of the total in FY24. However, India’s gold import tariffs stand at 20%, significantly higher than the 5.5-7% levied by the US. This disparity, combined with continuous central bank buying, could keep pushing gold prices higher.
Another factor to watch is the weakening Indian rupee, which has been a key driver behind the domestic price rise. If the rupee depreciates further, it could provide additional support for gold to hit the Rs 1-lakh milestone.
Is Now the Right Time to Invest in Gold ?
Gold has already delivered an 18.64% return in Q1, marking it as one of the best-performing assets of 2024. Over the financial year, its return stands at an impressive 39.73%.
Experts suggest that gold could see an additional 10-12% gain in the remaining quarters of 2025. Rahul Kalantri, VP Commodities at Mehta Equities Ltd, believes that persistent global uncertainty, inflation, and geopolitical risks will continue driving gold prices upward.
A CBS News report recommends gold as a hedge against inflation, highlighting its ability to retain and even appreciate in value during economic downturns. Meanwhile, Narne advises maintaining a diversified investment approach, with 5-20% of a portfolio allocated to gold and related assets.
Given recent stock market volatility, gold has stood out as a resilient asset. While timing investments is crucial, the current economic landscape suggests that gold remains a favorable option for those seeking stability in uncertain times.