Gold price hits $2,900 today, up 11% in 2025; will the rally continue?

The recent uptick in gold prices in 2025 has been led by tariff threats by US president Donald Trump, which in turn have seen investors move away from equities to safer havens.

Gold prices have continued their stellar run of calendar year 2024 (CY24) into 2025 as well. The yellow metal surged nearly 11 per cent thus far in CY25 to hit $2900 levels in the international market on Monday. Back home, the gold prices (SPOT) gained over 1 per cent on the MCX to breach the Rs 85,000 mark per 10 grams. 

 

Unlike in CY24, gold demand and gold prices, experts suggest, that had gained momentum on the back of buying by global central banks and investment demand, the recent uptick in the yellow metal in 2025 has been led by tariff threats by US president Donald Trump, which in turn have seen investors move away from equities to safer havens.

 

 

A cut in interest rates by the US Federal Reserve (US Fed), said G Chokkalingam, founder and head of research at Equinomics Research can create deflationary conditions, which indirectly will benefit gold. Though the central bank has paused for now, it remains to be seen for how long it can stay put.

 

“There is a lot of uncertainty around trade wars, Fed interest rates and how the global economy will shape up in this backdrop. All this is making stock market investors across the globe nervous, who are shifting to gold as a safe haven. Reports also suggest buying by central banks, which is also supporting prices,” Chokkalingam explained.

 

Trump’s Trade War 2.0, analysts said, is different from the US-China Trade War 1.0 enacted in January 2018 in terms of coverage, as this time round it involves major trading partners of the US, on top of the ongoing US-China Tech War. 

 

Hence, countries that have a significant trade surplus with the US will be at risk of being targeted by Trump’s trade tariffs policy; the European Union, Japan, South Korea, and ASEAN export-dependent countries such as Vietnam, and Malaysia. 

 

Gold demand trends

 

Meanwhile, central banks, according to the World Gold Council (WGC), continued to buy gold at a healthy pace in 2024, with purchases exceeding 1,000 tonnes for the consecutive calendar year. Buying ramped up significantly in October – December 2024 period, reaching 333 tonnes and bringing the annual total for central banks to 1,045 tonnes, as per the WGC.

 

Global investment demand, the WGC said, increased 25 per cent year-on-year to 1,180 tonnes – a four-year high – driven by a revival in gold exchange traded fund (ETF) demand in the second half of 2024. Global gold ETFs added 19 tonnes in Q4-CY24, marking two consecutive quarters of inflows for the asset class. Bar and coin demand stayed largely in line with 2023 volumes at 1,186 tonnes in 2024.

 

“We expect central banks to remain in the driving seat in 2025 and gold ETF investors to join the fray, especially if we see lower, albeit volatile interest rates. On the other hand, jewellery (demand) weakness will continue as high gold prices and soft economic growth squeeze consumer spending power. Geopolitical and macroeconomic uncertainty should be prevalent themes this year, supporting demand for gold as a store of wealth and hedge against risk,” said Louise Street, senior markets analyst at the WGC. 

 

Trump’s new round of tariff threat on metal products, according Jateen Trivedi, vice-president and research analyst for commodity & Currency at LKP Securities, triggered an upswing in gold that moved up above Rs 85,800 on MCX in intraday deals on Monday.

 

“With no specific clarity on which countries are included or excluded, uncertainty in global trade has driven significant bullion buying. Rupee's lowest level of 87.94 also provided major support to gold in the domestic market. Given the growing risk-off sentiment, gold is expected to maintain a positive trend, with a projected range of Rs 84,000 – Rs 86,500 in the coming days,” he said.