Gold breaches ₹1 lakh per 10 grams amid U.S.-China trade tensions, renewed Russia-Ukraine conflict

Gold prices surged to ₹1,00,065 per 10 grams in Ahmedabad on Tuesday, reflecting a strong upward trend in the bullion market. On the Multi Commodity Exchange (MCX), gold closed at ₹97,953 per 10 grams, marking a significant gain. Meanwhile, international gold prices were trading at $3,360 per ounce at 15:00 IST, underscoring the global rally driven by safe-haven demand and macroeconomic uncertainties.

"Investors' reactions to rising trade and geopolitical tensions caused gold to jump nearly 3% and silver to rise 5%," said Renisha Chainani, head-research, Augmont. Furthering souring relations with trading partners, U.S. President Donald Trump has threatened to double tariffs from 25% to 50% on steel and aluminium beginning Wednesday.

Kaynat Chainwala, AVP-commodity research, Kotak Securities, said, "COMEX Gold August futures rallied 2.5% yesterday to a three-week high of $3,408 per ounce, driven by a surge in safe-haven demand amid intensifying U.S.-China trade tensions. Both nations have accused each other of violating the existing trade truce, significantly dampening hopes for renewed negotiations. In response, China has vowed retaliatory measures, stoking fears of a prolonged trade conflict."

Tensions between Beijing and Washington grew as Trump accused China of breaking a trade agreement with the U.S. China responded with accusations of its own, further escalating trade uncertainty worldwide. Markets anticipate the likely meeting between Trump and Chinese President Xi Jinping later this week.

Also, Trump's plan to double tariffs on steel and aluminium imports, effective June 4, drew a sharp response from the European Union, which warned the move could derail trade talks with the U.S. and prompt retaliatory measures.

In the meantime, a Ukrainian drone strike that allegedly destroyed more than 40 Russian aircraft sparked a barrage of missile and drone attacks from Moscow, intensifying the war between the two countries. Negotiations in Istanbul concluded after the two parties met for just over an hour on Monday without making much progress towards a deal.

"Geopolitical risks also added to gold’s bullish momentum as renewed conflict between Russia and Ukraine, and fears of a possible U.S. or Israeli strike on Iran’s nuclear facilities have further soured global risk sentiment," said Chainwala.

"Gold prices have broken the range of $3,275 (around Rs 95,000) and $3,375 (around Rs 96,400) on the upside. If this positive momentum continues, we are likely to see the price rise towards $3,450 (Rs 99,000). Silver prices have broken the one-month range of $32.5(Rs 96,000) and $34(Rs 99,000), the next resistance is $35 (Rs 101,500)," said Chainani.

Also, a comment by Federal Reserve Governor Christopher Waller that any tariff-driven inflation would likely be temporary, giving the Fed scope to deliver “good news” rate cuts in 2025, is another supportive factor for gold prices. "Today, gold edged slightly lower, dipping below $3,390 per ounce, as investors await the JOLTS job openings report and remarks from several Federal Reserve officials for fresh monetary policy signals," added Chainwala.