Domestic gold prices in India are expected to face volatility due to fluctuations in the USDINR exchange rate, influenced by renewed global market uncertainty. Spot gold prices experienced a sharp rally after suffering their worst weekly decline in 2025 during the week ending May 16. The recent surge was driven by increased safe-haven demand following the U.S. losing its last top-tier credit rating.
Market tensions escalated further due to U.S. President Trump’s renewed threats of tariffs on the European Union, as well as tech giants Samsung and Apple. These geopolitical and economic developments have contributed to heightened market uncertainty. The outlook for gold remains sensitive to further developments in U.S. tariffs, Federal Reserve commentary, upcoming economic data, and fluctuations in yields and the Dollar Index. Investors are closely monitoring these factors, with ETF flows and USDINR movements playing a critical role in shaping domestic gold trends.
The decline in gold prices reflects a shift in investor sentiment, with reduced demand for safe-haven assets amid easing trade tensions. However, the market remains susceptible to fluctuations based on geopolitical developments and economic indicators. Investors are advised to maintain a cautious approach, considering the various factors influencing gold prices.