The US Dollar attracts some buyers for the third straight day and looks to build on this week's bounce from a multi-month low, exerting some downward pressure on the Gold price during the Asian session on Friday.
Investors remain worried about US President Donald Trump's threatened reciprocal tariffs, which he said will come into effect on April 2. This comes on top of a flat 25% duty on steel and aluminum since February.
Both Russia and Ukraine stepped up aerial attacks on Thursday amid truce talks, with Ukraine striking Russia’s Engels airbase in the Saratov region with attack drones, causing a fire and explosions in the area.
Furthermore, Ukraine’s air force said on Thursday that Russia had launched 171 drones over its territory. Meanwhile, Russian and US officials are scheduled to hold talks on Ukraine in Saudi Arabia on Monday.
Israel resumed heavy strikes across Gaza on Tuesday, breaking the ceasefire with Hamas that was in place since late January. Moreover, Hamas fired three rockets at Israel on Thursday, without causing casualties.
The Federal Reserve indicated that it would deliver two 25 basis points rate cuts by the end of this year and also revised down its growth outlook amid the uncertainty over the impact of Trump's aggressive trade policies.
Adding to this, Fed Chair Jerome Powell said that tariffs are likely to dampen economic growth. Investors now see the US central bank lowering borrowing costs at the June, July, and October monetary policy meetings.
The prospects for further policy easing by the Fed might hold back the USD bulls from placing aggressive bets and act as a tailwind for the non-yielding yellow metal in the absence of any relevant US macro releases.

FXStreet calculates Gold prices in India by adapting international prices (USD/INR) to the local currency and measurement units. Prices are updated daily based on the market rates taken at the time of publication. Prices are just for reference and local rates could diverge slightly.

Gold FAQs

Why do people invest in Gold?

Gold has played a key role in human’s history as it has been widely used as a store of value and medium of exchange. Currently, apart from its shine and usage for jewelry, the precious metal is widely seen as a safe-haven asset, meaning that it is considered a good investment during turbulent times. Gold is also widely seen as a hedge against inflation and against depreciating currencies as it doesn’t rely on any specific issuer or government.

Who buys the most Gold?

Central banks are the biggest Gold holders. In their aim to support their currencies in turbulent times, central banks tend to diversify their reserves and buy Gold to improve the perceived strength of the economy and the currency. High Gold reserves can be a source of trust for a country’s solvency. Central banks added 1,136 tonnes of Gold worth around $70 billion to their reserves in 2022, according to data from the World Gold Council. This is the highest yearly purchase since records began. Central banks from emerging economies such as China, India and Turkey are quickly increasing their Gold reserves.

How is Gold correlated with other assets?

Gold has an inverse correlation with the US Dollar and US Treasuries, which are both major reserve and safe-haven assets. When the Dollar depreciates, Gold tends to rise, enabling investors and central banks to diversify their assets in turbulent times. Gold is also inversely correlated with risk assets. A rally in the stock market tends to weaken Gold price, while sell-offs in riskier markets tend to favor the precious metal.

What does the price of Gold depend on?

The price can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can quickly make Gold price escalate due to its safe-haven status. As a yield-less asset, Gold tends to rise with lower interest rates, while higher cost of money usually weighs down on the yellow metal. Still, most moves depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAU/USD). A strong Dollar tends to keep the price of Gold controlled, whereas a weaker Dollar is likely to push Gold prices up.

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