Mumbai, February 28 – Gold prices dipped on Wednesday as global markets reacted to ongoing trade tensions and economic uncertainty. After recently hitting record highs, gold faced selling pressure as investors reassessed their positions amid shifting global economic conditions.
Gold Prices See Modest Decline
In early trade, gold futures on the Multi Commodity Exchange (MCX) slipped 0.5% to ₹63,450 per 10 grams, reflecting a cautious sentiment among investors. Spot gold prices also weakened, trading around $2,018 per ounce internationally as the U.S. dollar strengthened.
Analysts attributed the decline to profit-booking by investors who had recently piled into the safe-haven asset amid fears of a prolonged global trade conflict. “After a strong rally in recent weeks, some amount of correction was expected in gold prices as traders locked in gains,” said Anuj Gupta, Vice President of Commodity Research at IIFL Securities.
Impact of U.S. Trade Policies on Gold
Gold’s movement continues to be influenced by geopolitical and economic developments, particularly in the United States. President Donald Trump reaffirmed his stance on imposing tariffs on Canadian and Mexican imports, sparking concerns over an escalating trade war. Additionally, a 10% tariff on Chinese goods is set to take effect on March 4, adding another layer of uncertainty to global trade.
“Trade wars and economic disruptions typically boost gold’s appeal as a safe-haven investment, but short-term fluctuations occur due to profit-booking and fluctuations in the U.S. dollar,” noted Sunil Patil, an independent commodity analyst.
Stronger Dollar Weighs on Gold Prices
One of the key factors behind gold’s dip was the strengthening of the U.S. dollar. The dollar index rose to a two-week high, making gold more expensive for holders of other currencies. Rising bond yields in the U.S. also impacted investor sentiment, reducing gold’s attractiveness relative to interest-bearing assets.
“Gold tends to move inversely to the dollar. As the greenback strengthened today, it put downward pressure on gold prices,” explained Ramesh Bhatia, a senior economist at a Mumbai-based financial firm.
Domestic Demand and Inflation Outlook
Despite global weakness, domestic gold demand in India remains resilient, driven by wedding season purchases and expectations of higher inflation. Jewelers and retail buyers continue to show interest in gold as a hedge against rising prices.
“Indian households view gold as a long-term store of value, and while short-term price movements may impact sentiment, the demand remains strong in key consumption periods,” said Surendra Mehta, National Secretary of the India Bullion and Jewellers Association (IBJA).
Outlook for Gold Prices
Going forward, analysts expect gold to remain volatile as markets digest global economic data, trade war developments, and central bank decisions. While short-term fluctuations are likely, the broader trend suggests that gold will continue to act as a hedge against economic and geopolitical uncertainty.
Traders and investors will keep a close watch on upcoming inflation data, interest rate signals from the U.S. Federal Reserve, and geopolitical events, which could determine gold’s trajectory in the near term.
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