Gold Posts 25% YTD Gains Amid Trade Tensions and Inflationary Concerns; Outlook Remains Firm by Motilal Oswal Financial Services Ltd
Gold has delivered a stellar performance in the first four months of 2025, gaining nearly 25% year-to-date (YTD) and marking all-time highs on both MCX and COMEX. Silver has also followed suit with a 15% YTD gain on COMEX. This sharp rally is attributed to a combination of heightened geopolitical risks, trade tensions—particularly between the U.S. and China—and a surge in safe-haven demand from both institutional and retail investors.
The outlook for gold remains constructive. Persistent trade tensions, inflationary pressures, and central bank gold purchases are expected to continue supporting prices. Technical levels indicate strong support for gold around INR 91,000 and resistance near INR 99,000 on MCX, while on COMEX, key levels to watch are USD 3100 and USD 3400.
With the global economy navigating through policy uncertainty and slowing growth, gold is likely to remain an attractive asset class. “In an environment dominated by policy uncertainty, inflationary pressures, and volatile geopolitics, gold continues to be a beacon of stability. As central banks bolster their reserves and investors seek safety, we believe gold will remain a favoured asset. Barring any significant resolution in global trade tensions, we maintain a ‘buy on dips’ view from a medium to long-term perspective,” said Navneet Damani, Grp Sr. Vice President, Head Commodity & Currency Research, Motilal Oswal Financial Services.
Gold’s momentum has notably outpaced silver’s so far this year, both in terms of scale and pace. Following recent comments from President Trump regarding higher tariffs on Chinese goods, gold briefly corrected but quickly recovered—demonstrating resilience and investor confidence. The Trump administration’s aggressive trade stance has targeted over 50 trading partners, with particularly steep tariffs imposed on China (up to 145%), prompting retaliatory measures (up to 125%) from Beijing. This has led to market-wide concerns of a prolonged slowdown or potential stagflation in the U.S. economy.
Further compounding these risks is a weakening U.S. dollar, which has declined by over 7% against major global currencies this year. Meanwhile, U.S. Treasury yields have climbed as hedge funds unwind positions amid fears of higher inflation and slowing growth. Central banks, especially in emerging markets like China, have been steadily increasing their gold reserves, further bolstering demand and price stability.
The Federal Reserve’s monetary policy has also influenced market sentiment. After three interest rate cuts in 2024, the Fed has taken a “wait and watch” approach in 2025 to assess the economic fallout from ongoing trade policies. While President Trump has openly advocated for further rate reductions to stimulate growth, Fed Chairman Jerome Powell has maintained a cautious stance, citing inflationary risks from tariffs and broader economic uncertainties.
Despite the turbulence, the U.S. labour market remains robust with historically low unemployment levels, offering some cushion against economic headwinds.
However, the broader global macroeconomic environment continues to favour gold and other safe-haven assets. Unless a meaningful resolution to global trade disputes is reached, the upward trajectory for bullion prices appears well-supported in the medium to long term
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