Gold prices in India are declining following a 3% drop on Comex last Friday. The current price stands at 8,330.45 Indian Rupees (INR) per gram, down from INR 8,373.94.
The price per tola has decreased from INR 97,671.99 to INR 97,166.22. Concerns over a widening global trade war are prompting a sell-off in equity markets, leading traders to liquidate gold positions.
Impact Of Global Trade War
The People’s Bank of China added 0.09 million troy ounces of gold to its reserves last month. Recent tariffs on imports from the US and China have further intensified market volatility.
US job data showed an addition of 228K jobs in March, exceeding expectations. Federal Reserve Chair Jerome Powell noted inflation remains slightly elevated while tariffs could impact it further.
Market participants are anticipating potential rate cuts by the US central bank later this year. The yield on benchmark 10-year US government bonds remains below 4.0%, which affects gold’s attractiveness.
Gold serves as a safe-haven asset, and central banks are increasing their reserves. In 2022, central banks added 1,136 tonnes of gold, marking the highest annual purchase recorded.
Gold prices are inversely correlated with the US Dollar and Treasuries; when the Dollar weakens, gold prices typically rise. Geopolitical events and economic fears can also drive gold prices up.
Market Fluctuations And Strategies
Yields influence gold’s price, with lower interest rates generally supporting higher prices. The asset’s valuation remains closely tied to the performance of the US Dollar.
Seen through the scope of recent developments across commodity markets, the decline in gold pricing signals a shifting tide that deserves close attention—not merely as a singular event, but as part of a larger sequence of monetary and geopolitical triggers. Friday’s 3% drop on Comex has trickled into domestic markets, as evidenced by the reduction in per gram and tola rates. This is not unexpected. We’ve seen such reactions before during broader sell-offs, particularly those tied to fluctuations in wider economic risk perceptions.
The trigger this time appears to be increasing strain from tit-for-tat tariffs, rekindling memories of previous trade tensions between major economies. With fears growing around stalled trade flows, there’s been a retreat from riskier financial instruments. This typically pushes capital into safe stores of value—but interestingly, this time many are taking profit on gold, reducing rather than strengthening their holdings. That’s an indication of shifting strategy, suggesting some participants are rotating exposures rather than doubling down on defensive positions.
The recent modest addition to reserves by the Chinese central bank—although small in volume—reminds us that official sector demand is still present. Last year’s aggregate gold purchases by central banks around the world weren’t just symbolic; they formed a structural pillar supporting prices amid otherwise turbulent debt and equity dynamics. However, a lighter pace in monthly additions points to a more conservative accumulation pattern, one possibly influenced by short-term pressures on sovereign balance sheets.
From a macro view, the uptick in US job numbers came in stronger than widely forecasted. A robust reading like this often introduces uncertainty around the timing of interest rate adjustments. That said, Powell has reiterated that inflation remains marginally above target ranges, and the tariffs may stir further price increases across imported goods, complicating the Fed’s rate-setting path. A delayed or smaller-than-expected rate cut pushes longer-term yields higher, which doesn’t play in favour of non-yielding assets like gold.
Still, yields on US 10-year bonds are holding under 4.0%. For now, that’s a supportive, though not explosive, tailwind for bullion. Rates and rewards on safe government debt stay low, so opportunity costs for holding gold remain contained. But should we see unexpected inflation spikes or a resurgence in Dollar strength, pricing pressure could gather speed. With the Dollar and Treasuries still holding strong appeal among global funds, any shift there would cast longer shadows over gold valuations.
For those navigating derivatives, implications cannot be overstated. The clear negative correlation between gold and the US Dollar means any meaningful strengthening in the Greenback would weigh further on gold contracts. Meanwhile unfolding economic events—from amendments in tariffs to fresh central bank communiqués—should be mapped closely with spot and futures alignment. Moves like we saw in March’s labour print often cause swift repricing in interest rate assumptions, with knock-on effects for hedging portfolios.
Volatility may stay elevated while monetary uncertainty persists. Options pricing could reflect more premium for out-of-the-money calls and puts. Roll decisions for longer-dated contracts must consider both rate direction and any systematic shifts in reserve management strategy. What matters now isn’t just the data—it’s the relative weight we assign to each policy signal and how we adjust positioning as inflation, yield, and Dollar strength interact.
