Gold Prices Soar to Record Highs Amid Escalating Geopolitical Tensions
Gold prices are climbing to unprecedented levels this week. Senior analyst Praveen Singh from Mirae Asset Sharekhan points directly to rising geopolitical tensions as the primary driver. The shiny metal's remarkable rally shows no immediate signs of slowing down.
Weekly Performance Shows Strong Momentum
Spot gold jumped nearly two percent during the week ending January 16. It closed firmly at $4,595 per ounce. This impressive gain followed another substantial increase of 4.6 percent just one week earlier.
The rally continued through January 19. Gold reached a fresh all-time high of $4,690. This surge came after the US President threatened eight European Union nations with new tariffs. The proposed ten percent duties would start on February first.
These tariffs represent retaliation against European opposition to American plans regarding Greenland. As of the latest trading, gold was holding strong at $4,672. The MCX February contract in India traded around Rs 145,500.
ETF Holdings and COMEX Inventory Data
Global gold ETF holdings reached 99.86 million ounces by January 16. This marks the highest level since August 2022. Holdings have increased for two consecutive weeks, showing sustained investor interest.
COMEX registered gold inventory currently stands at 18.86 million ounces. While this represents an increase from recent lows, it remains significantly below the peak recorded last April. The inventory is down more than twenty-two percent from that high point.
Dollar and Treasury Yield Movements
The US Dollar Index dipped slightly to 99.08 on January 19. This followed three straight weeks of gains. Meanwhile, treasury yields experienced notable jumps last week.
Both two-year and ten-year yields rose nearly two percent. This movement coincided with presidential doubts about appointing a key advocate for lower interest rates. The bond market remained closed on January 19 for the Martin Luther King Jr. holiday.
Trade Tensions Take Center Stage
The tariff threats have created significant uncertainty in international markets. The proposed duties would begin at ten percent in February. They could escalate to twenty-five percent by June first.
American officials stated these tariffs would remain until reaching a complete agreement on Greenland. European Union ambassadors convened urgently to discuss potential responses. They are evaluating countermeasures targeting American goods worth approximately ninety-three billion euros.
EU leaders plan an emergency summit later this week. The bloc may deploy its anti-coercion instrument against the United States. This powerful tool allows various economic responses to coercive trade practices.
Key Developments to Watch
The US Supreme Court may rule on earlier presidential tariffs as soon as Tuesday. This decision could create substantial market volatility. President Trump will also address the World Economic Forum in Davos this week.
His speech may include details about home ownership initiatives for American citizens. A recent survey identified geopolitical confrontation as a major global risk for the coming years.
Economic Data Roundup
Recent Chinese economic data showed mixed results. The economy grew slightly faster than expected in the last quarter. However, retail sales reached a three-year low in December.
American inflation data remained stable in December. The consumer price index matched forecasts exactly. Retail sales showed improvement from previous months.
Several important economic releases are scheduled for this week:
- US GDP final reading for the third quarter
- Personal consumption expenditures price index
- Multiple purchasing managers' indices
- European and British inflation data
Gold Price Outlook and Technical Levels
The unexpected escalation in US-EU tensions continues supporting gold prices. Without these developments, several factors might have pressured the metal. These include a potentially firmer dollar and reduced geopolitical concerns elsewhere.
Spot gold may test resistance around $4,750 in the coming sessions. The MCX February contract equivalent would be approximately Rs 148,000. However, analysts urge caution given the elevated risks.
Buyers should implement appropriate stop-loss measures. Key support levels exist at $4,608 and $4,560. Interim resistance sits near $4,707.
Silver Market Shows Even Stronger Gains
Silver prices surged more than twelve percent last week. The white metal closed at $89.94 on January 16. Current trading shows silver around $94.42, with the MCX March contract near Rs 309,660.
Potential US tariffs could disrupt expected silver inventory flows between major exchanges. This disruption might tighten physical market conditions further.
Silver appears positioned for continued positive movement. A sustained close above $94 could signal further strength. The metal may then test resistance between $98 and $100.
As with gold, extreme caution remains necessary for silver positions. Proper risk management through stop-loss orders is essential. Support levels exist at $90 and $86 for spot silver.
Market recommendations and views expressed by analysts represent their individual opinions. These perspectives do not necessarily reflect the position of this publication.
