Why is Gold Rising Amidst a Softer Dollar?
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Synopsis
Gold prices have surged over 0.7% on the MCX as demand strengthens amid a declining US dollar. This upward trend follows a previous profit-taking sell-off, driven by geopolitical tensions and market uncertainties. With upcoming US-China trade talks on the horizon, analysts suggest gold may continue to rise as a safe haven investment. Stay informed on this dynamic market!
Key Takeaways
- Gold prices increased on the MCX by 0.78% due to a weaker dollar.
- Spot demand remains strong amidst market uncertainties.
- Upcoming US-China talks may influence future gold prices.
- Gold has appreciated over 70% in the last year.
- Geopolitical tensions continue to drive gold as a safe haven asset.
New Delhi, Oct 20 (NationPress) Gold prices experienced an increase on the Multi-Commodity Exchange (MCX) this Monday morning, bolstered by a robust demand in the spot market and a weaker US dollar.
During the initial trading session, MCX Gold December futures ascended by 0.78 per cent to reach Rs 1,28,005 per 10 grams, while Silver December contracts also rose by 0.41 per cent to Rs 1,57,240 per kg.
The rebound in gold prices followed a significant decline during the prior session, as global investors opted to take profits after comments made by US President Donald Trump regarding tariffs on China.
These statements prompted traders to transition from safe-haven assets, such as gold, to more speculative investments.
On the international front, gold prices surged to $4,255 per ounce on Monday after a notable drop on Friday.
Market experts indicated that attention is now focused on the forthcoming discussions between the US and China. US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng are set to meet this week. Trump has expressed hope that these talks could culminate in an agreement.
He acknowledged last week that the proposed high tariffs on Chinese imports are not sustainable.
On Friday, gold prices experienced a steep sell-off, with MCX Gold December futures declining by 2 per cent to Rs 1,27,320 per 10 grams, while US gold futures dropped over 2 per cent to settle at $4,213.30 per troy ounce.
Despite recent fluctuations, gold prices have appreciated by more than 70 per cent in the domestic spot market over the past year.
Analysts attribute this upswing to global economic uncertainties, substantial central bank purchases, expectations of rate cuts from the US Federal Reserve, and increased capital into gold exchange-traded funds (ETFs).
Experts believe that gold will maintain its support as long as geopolitical tensions persist and the dollar stays weak.
“The ongoing uncertainty surrounding the US economy and postponed data releases have kept investors leaning toward gold as a safe asset,” experts stated.
“With the momentum remaining strongly positive, gold is expected to stay elevated as long as risk sentiment remains subdued,” they added.
Point of View
It's crucial to recognize the ongoing fluctuations in gold prices as indicative of broader economic uncertainties. The interplay between geopolitical tensions and market sentiment greatly influences investor behavior, emphasizing the importance of strategic asset allocation in turbulent times. Our commitment remains to provide insightful analyses that empower our audience with knowledge.
NationPress
20/10/2025
Frequently Asked Questions
What factors are driving the rise in gold prices?
The rise in gold prices is primarily driven by a weaker US dollar, strong spot demand, and ongoing geopolitical tensions, alongside expectations of rate cuts from the US Federal Reserve.
How have gold prices changed over the past year?
Gold prices have increased by more than 70% in the domestic spot market over the past year, reflecting significant investor interest amidst economic uncertainties.
What is the outlook for gold prices?
Experts believe that if geopolitical tensions persist and the dollar remains weak, gold prices will continue to find support and may remain elevated.
