On Thursday, the gold price dropped by over 2% from the previous session and reached a five-week low. Demand for safe-haven assets fell due to easing global trade tensions.
Gold trades at $3,140, having fallen from the all-time high level of $3,500 posted in April, a fall of over 10% from the record highs.
As the US and China agreed to drastically reduce tariffs and started a 90-day truce to complete a larger agreement, President Trump mentioned continuing talks with South Korea, Japan, and India.
Geopolitical risks also decreased with India-Pakistan tensions normalizing and growing hope that Trump would relax sanctions on Syria during his Middle East visit.
Lower-than-expected US inflation figures strengthened expectations for potential rate reduction by the Federal Reserve, which is generally supportive of non-yielding assets.
Gold price today in India is Rs 91,250, down by Rs 8,750, a fall of 8.75% from the lifetime high of Rs 1 lakh recorded on April 22.
Gold is revered as the ‘God of Uncertain Times’, providing a secure haven during economic turmoil and high debt levels among central banks.
On MCX, the gold futures contracts for August, October, and December are, however, trading higher than the current gold prices.
The Trump administration is negotiating with other countries, and markets anticipate a lower tariff structure soon. Trump suggests potential reconciliation with other trading partners besides China.
Equities look to be a better risk-off option in the current situation than remaining invested in gold. As the economy improves, gold will face continued selling pressure.
