Gold prices have dropped sharply from their recent record highs as easing geopolitical risks and improving trade relations reduce safe-haven demand. Currently, gold is trading at $3,140 per troy ounce, down more than 10% from the all-time high of $3,500 reached in April.
On Thursday, gold prices slipped over 2% from the previous session, hitting a five-week low. The decline comes as global trade tensions continue to ease. The US and China recently agreed to significantly cut tariffs and initiated a 90-day truce to finalize a broader agreement. Meanwhile, US President Donald Trump confirmed ongoing trade discussions with South Korea, Japan, and India, further boosting market confidence.
Geopolitical risks have also receded, with tensions between India and Pakistan normalizing and expectations rising that US sanctions on Syria could be softened during Trump’s Middle East visit.
Gold Price Drops in India
In India, gold prices have followed the global trend. Today, gold is priced at ₹91,250 per 10 grams, down by ₹8,750 or 8.75% from the lifetime high of ₹1 lakh recorded on April 22. However, MCX gold futures contracts for August, October, and December are still trading at higher levels than current spot prices, reflecting cautious optimism.
Mixed Signals from US Economy
While easing geopolitical tensions weigh on gold, expectations of potential interest rate cuts by the US Federal Reserve remain supportive for the metal. Lower-than-expected US inflation figures have bolstered hopes of a policy easing, which typically benefits non-yielding assets like gold.
Gold has long been considered a hedge during times of economic uncertainty and high debt levels among central banks. However, the latest developments suggest a more positive global economic outlook. Trump’s administration is pushing for broader trade deals, with markets anticipating a lower global tariff structure.
The shift in Trump’s tone and the possibility of reconciliation with multiple trading partners besides China has further dampened the immediate need for safe-haven assets like gold.
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