Gold Prices In India May Shine Ahead, MCX Gold Seen At Rs 82,200; Five Trump-Related Factors To Impact

Gold prices in India will likely shine ahead and test new psychological levels such as Rs 81,600 to Rs 82,200 per 10 grams in the current week. The start has been on a bearish tone with gold and silver prices falling on Monday, January 27. For the week, the major driving factor will be Donald Trump and his policies. The January month performance is likely to be the best monthly performance since October last year.

On January 27th, 24 K gold prices were at Rs 82,250 per 10 grams, down by Rs 170. Meanwhile, 22K and 18K gold prices dipped by Rs 150 and Rs 130 to Rs 75,400 and Rs 61,690 per 10 grams, respectively. Despite the latest fall, gold prices are still up by 5.5% overall in January so far.

Gold prices in India have been down since October month, and one of the major reasons for decline in November and December 2024 was Donald Trump's victory in the US election. The expectations of his stringent policies especially tariff hikes to neighbouring countries, were among the key driving forces for the dollar index, making gold lose traction. Gold was down by 0.6% in December, while it plunged by 3.2% in November 2024. Gold was up by 5.5% to 6% in the October to September period.

Further, on January 27th, Silver price also dipped by Rs 1,000 to Rs 96,500 per 1kg. However, silver prices in Chennai, Hyderabad and Kerala continue to be very expensive at Rs 1,04,000 per 1kg. Silver has outperformed gold, with gains of nearly 7% in January so far.

MCX Gold, Silver Prices:

Meanwhile, MCX gold with its February 2025 expiry, touched a new all-time high of Rs 80,151 per 10 grams on Monday, before correcting to Rs 79,623 per 10 grams. MCX silver prices also surged to hit an intraday high of Rs 91,388 per 1 kg, before closing at Rs 90,275 per 1kg. Both the precious metals were marginally up after the closing bell.

Dr. Renisha Chainani, Head of Research at Augmont said, the gold market is on track for its greatest monthly performance since September and is having its best start to the year since 2023 as prices test the upper end of their range near $2790 (~Rs 80300). Despite an approximately 27% rally in the last year, the precious metal has a strong start to the year.

Here are five key factors related to Trump that could impact gold prices, as per Dr. Renisha Chainani, Head of Research at Augmont:

1. Trump's 2.0 innings begin:

De-globalization has begun and appears to be accelerating, particularly as the U.S. attempts to impose conditions that benefit itself. "America First" policies and high tariffs may benefit the U.S., but they also undermine confidence in a nation that ought to be setting an example for free market economies. This new phenomenon is likely to fuel inflationary pressures and possibly trigger a wave of devaluations in other nations to offset the tariffs. The Trump administration may usher in a new era of government stimulus and more loosened monetary policy.

2. Trump Tariff Threat:

By February 1, Trump, the self-described "Tariff Man," intends to levy 25% tariffs on Canada and Mexico. Additionally, he threatened to impose broad, universal tariffs on all imports entering the United States, thereby starting an economic war with the rest of the globe.

3. Trump's Impact On Dollar:

The dollar's decline in response to Trump's comments that he would soften tariffs and accept a trade agreement with China has coincided with gold's ascent to a new all-time high. Trump stated earlier this week that if an agreement on Ukraine is not achieved, he would probably slap further penalties, levies, and tariffs on Russia. Because of the uncertainty around the effects of Trump's proposed tariffs and immigration policies, traders continued to gravitate toward safe-haven assets.

4. Trump Demands Lower Interest Rates:

President Donald Trump of the United States made his first shot at the Federal Reserve's monetary policymaking since taking office three days ago on Thursday, saying he would insist that interest rates be cut quickly and that other nations should do the same. Because the central bank sets monetary policy and is expected to release its interest rate decision next week, traders are apprehensive even though lower borrowing costs are generally positive for precious metals.

5. Trump's plan to tackle Inflation:

Tax cuts, deregulation, and interest rate reductions are the three primary pillars of Trump's strategy, which aims to lower costs for both consumers and corporations. Many economists and investors believe that Trump's intention to deport a substantial number of undocumented immigrants and his pursuit of large-scale tariffs on America's trade partners-which are effectively levies on imports-run a danger of rekindling inflation pressures.

Chainani said, "Amidst indications of reducing inflationary pressures in the US, the markets began factoring in the potential for the US central bank to cut interest rates twice before the end of this year."

Lastly, the expert added, "$2800 (Rs 80,000). Clearing this level now opens the ceiling to the next psychological level of $2850 (Rs 81600) and $2900 (Rs 82800)," adding, "Similarly, Silver has been consolidating in the descending triangle with support at Rs 87000 and resistance at Rs 94000. Prices need to sustain above $31 (Rs 94000) and breakout of this triangle to continue its uptrend towards Rs 96000 and beyond."