Gold has been the talk of financial markets around the world for quite some time.
The yellow metal’s stunning rise to new all-time highs above US$ 3,000 per ounce in the global market and Rs 90,000 per 10 gm in India, has made it the topic of everyday conversation.
In 2024, gold delivered 20% compared to the Nifty’s 8.7% gain. And 2025 has seen the upward momentum continue.
From about Rs 78,000 to Rs 93,000, the price of gold has risen close to 20% in a little over three months so far this year.
In fact, since August 2024, the gold price has moved up from around 70,000 levels. That’s a rise of about 33% in just eight months.
Going back a little further, the price has been moving up sharply since February 2024 from 64,000 levels. That’s a gain of about 45% in little more than one year.
The gains over the last 5 years have been excellent. The price has more than doubled, delivering a compounded annual growth rate (CAGR) of a little over 16%.
These are the kind of gains that would satisfy a conservative stock market investor.
Sure, the Nifty has outperformed gold in the last five years, but that’s mostly due to the huge post covid bull market of 2020-21. Otherwise, gold has kept pace with stocks, even outperforming the equity benchmark indices.
But what about the future? Will the gold price continue to rise, or will it finally take a breather?
To figure out the answer, we must understand the factors that influence the price of gold.
#1 Trade Wars
In a nutshell, the US President Donald Trump’s tariffs has raised the yellow metal’s safe-haven appeal.
Gold has always been a safe haven asset. People flock to gold either when times are tough or when there is uncertainty in financial markets.
Recently, Trump has followed through on his election promise to impose reciprocal tariffs. This decision has raised concerns of a global trade war.
The new US tariffs are not only very high but are also broad-based. Hardly any country was spared.
In the case of some countries, the new US tariffs so high that it could potentially destroy trade relations between the two nations.
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