Gold prices are expected to remain on an upward trajectory with market analysts expecting the rates to reach $3000 per ounce in the near term, amid global uncertainty over US tariffs and the fate of the Russia-Ukraine war.
The World Gold Council (WGC) has said that the announcement of US tariffs has created market shocks leading to an indirect impact on the gold prices, which have moved from $2609.10 per ounce as of December 30, 2024, to $2933.25 per ounce on February 25, 2025, before a correction to $2834.55 per ounce as of February 28, 2025.
“Gold has not been a direct target of tariffs, but market reactions to trade uncertainty has driven a significant shift in trading behaviour and impacted the gold price,” researchers at WGC said in a market insight report.
“This may not be the last time we see temporary distortions in the gold market. The signs are, however, that the depth and liquidity of the gold market is able to absorb — over time — most of these shocks,” the report said.
“Growing concerns about US President Donald Trump’s tariff plans have continued to provide some support to the precious metal apart from softish US yields and the DXY (dollar index). The next logical level for the gold prices is $3,000 which we believe is coming soon after a short pullback,” said Sandip Raichura, CEO — retail broking and distribution and director — PL Broking and Distribution.
“Moving ahead, gold prices are expected to stay afloat on the back of continued global uncertainties. With prices witnessing continuous hikes, there is a possibility of near-term profit taking,” said Colin Shah, MD, Kama Jewelry, and the former chairman of the Gem and Jewellery Export Promotion Council.
The minutes of the US Federal Open Market Committee meeting have also disclosed a high degree of uncertainty that requires the central bank to take a careful approach in considering any further interest rate cuts. This could further support the gold prices.
Bullion flows West
America’s appetite for gold fuelled by potential tariffs is increasingly pulling gold into the US vaults as US banks and investors rush to secure precious metal supplies before the tariffs come into effect this week.
Data from CME shows Comex gold warehouse stocks have increased from 21.73 million ounces as of December 30, 2024, to 39.06 million ounces as of February 27, 2025, a jump of nearly 80 per cent. This can be attributed to the risk management strategies involving traders choosing to preempt the threat of tariffs by moving gold to the US, thus avoiding the possibility that they may have to pay higher charges in future.
However, WGC said that the decline in gold inventory in London has not been as much as speculated.
