Gold Prices Soar to Record High Amid US-EU Trade War Fears
Gold prices have surged to record highs, driven by escalating tensions between the U.S. and Europe, a weakening dollar, and strong retail demand. This surge reflects investors' growing apprehension about a potential trade war and geopolitical instability.
Market Overview
On Wednesday, gold prices witnessed a significant increase. In the domestic futures market, gold traded at ₹1,55,886 per 10 grams on the MCX exchange, a rise of 3.53% or ₹5,321. MCX Gold futures due February 5, 2026, rose Rs 3,266, or 2%, to Rs 1,53,831 per 10 grams. International markets also saw gold climb to a fresh record high above $4,800 per ounce. Spot gold rose about 2% to US$4,757.33 an ounce.
Silver prices have also experienced a surge, with domestic futures crossing the ₹3.25 lakh mark. On Wednesday morning, silver futures traded at ₹3,25,903 per kilogram on the MCX, an increase of 0.69% or ₹2,231.
Factors Influencing the Price Surge
- US-EU Trade War Fears: The possibility of a trade war between the United States and the European Union is a significant driver. The European Parliament may soon revoke the agreement reached with the U.S. on a trade deal, escalating tensions.
- Geopolitical Tensions: Tensions are rising due to President Trump's pursuit of Greenland, which could reignite a trade war with Europe and disrupt the NATO alliance.
- Weakening Dollar: The U.S. dollar's weakness has further supported gold's rise, making it cheaper for overseas buyers.
- Safe-Haven Demand: Investors are turning to gold as a safe-haven asset amid political and economic uncertainty.
Analyst Perspectives
Manoj Kumar Jain of Prithvi Finmart noted that both precious metals are witnessing high price volatility. He expects silver to hold its support level of $84 per troy ounce, while gold could sustain above $4,440 per troy ounce on a closing basis. Fawad Razaqzada, market analyst at City Index and FOREX.com, stated that gold has surged as investors hedge against rising political risks.
Global Market Trends
Global gold prices have surged past US$4,700 an ounce, marking a more than 9% increase since the start of the year. Spot gold reached US$4,765.93 earlier in the session. The rise has also been supported by expectations of US interest-rate cuts, reducing the opportunity cost of holding non-yielding bullion.
Conclusion
Gold prices have reached record highs due to a confluence of factors, including US-EU trade war fears, geopolitical tensions, a weakening dollar, and safe-haven demand. These factors have created a perfect storm for gold, driving prices to unprecedented levels.
