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Gold prices have soared past $3,050 per troy ounce, driven by a 2% depletion in the Bank of England’s reserves and prolonged withdrawal delays (4-8 weeks). Traders are shifting gold from London to New York amid fears of potential US tariffs under Trump’s administration, tightening supply in the London market. Meanwhile, central banks are projected to buy 800-1,000 tonnes in 2025, reinforcing gold's safe-haven appeal. The US dollar index has weakened by 3%, further boosting demand. With geopolitical risks escalating and rate cuts expected later in 2025, gold remains a preferred hedge, potentially sustaining its record highs in the coming months.

Key Highlights

Gold Prices Hit Record $3,050/Oz Amid London Supply Crunch

Gold prices have surged past $3,050 per troy ounce, driven by a 2% depletion in the Bank of England’s reserves, equivalent to 8,000 gold bars withdrawn. London’s gold market faces a severe supply crunch as withdrawals now take 4-8 weeks, far beyond the standard 14-day delivery under EFP rules. The supply shortage is further exacerbated by logistical challenges, with 400-troy-ounce bars needing recasting to meet New York's specifications. As traders shift bullion to COMEX warehouses, New York’s stock has risen 70% since November 2024, amplifying arbitrage demand. The persistent supply bottleneck is expected to support elevated gold prices in the coming months.

US Tariff Fears Drive Gold Migration from London to New York

Speculation over US import tariffs on gold under President Trump’s administration has triggered mass bullion transfers from London to New York. The move is fueled by a price arbitrage, as gold futures in New York trade at a premium over London. Market participants, including JPMorgan Chase and HSBC, have rapidly moved holdings, intensifying pressure on London's liquidity. In response, the Bank of England has appealed to central banks for gold lending, raising concerns over actual stock availability. This shift has tightened global supply chains and pushed gold prices higher, with investors closely watching potential policy decisions that could further reshape market flows.

Central Banks Expected to Purchase 1,000 Tonnes of Gold in 2025

Central banks are on track to acquire 800-1,000 tonnes of gold in 2025, reinforcing gold’s status as a safe-haven asset amid geopolitical and economic uncertainty. This follows record-breaking purchases in 2023 and 2024, with countries diversifying reserves away from the US dollar. China and India, key buyers, continue accumulating bullion, while emerging markets ramp up holdings. Central bank demand, accounting for 21% of market influence in recent LBMA forecasts, remains a crucial price driver. This sustained accumulation trend suggests strong long-term support for gold prices, aligning with projections of $2,925–$3,290 per ounce in 2025.

Weakening US Dollar Boosts Gold’s Safe-Haven Demand

The US dollar index has declined by 3% since Trump’s second-term inauguration, making gold more attractive to international investors. A softer dollar has helped gold breach the $3,050 per ounce mark, with further support from expectations of one or two US Fed rate cuts in 2025. A weaker USD typically strengthens gold as an alternative store of value, amplifying capital inflows. Meanwhile, the equity market fell , reflecting market volatility, further driving investors toward bullion. If the dollar continues weakening, gold’s upward momentum could persist, sustaining bullish sentiment across global markets.

Gold Market Faces Supply Disruptions as London Liquidity Tightens

The London Bullion Market Association (LBMA) has flagged a liquidity shortage, as major refineries report London’s gold stock levels are critically low. A leading global refinery recently notified clients that London warehouses are nearly empty, signaling a crisis in physical gold availability. The Bank of England’s 4-8 week delivery delays and its request for central bank gold loans have intensified concerns over whether London can meet global delivery obligations. If supply constraints persist, bullion premiums could rise, benefiting alternative markets like New York and Shanghai. The widening gap between physical gold availability and demand is expected to further bolster gold’s price trajectory in the near term.

Technical & Market Analysis – MCX Gold

Gold prices surged to a new all-time high of Rs.89,000 per 10g as global spot prices exceeded $3,050 per ounce, driven by strong safe-haven demand and firm fundamentals. The Federal Reserve kept interest rates steady at 4.25%-4.5%, signaling two potential rate cuts in 2025, further supporting gold. Escalating geopolitical tensions in the Middle East and US trade uncertainties have increased demand for gold as a hedge.

Technically, gold remains bullish, breaking past Rs.88,100 resistance and now testing Rs.90,250. Key Fibonacci levels show support at Rs.87,880 and Rs.86,540, with an upside target at Rs.90,121 (127.2%) and above can test 90,840. RSI at 73.20 signals overbought conditions, but MACD remains bullish, confirming momentum. Outlook remains ‘Buy on Dips,’ with fundamentals strong and corrections offering buying opportunities.

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