Friday 04 / April / 2025
New Delhi: The uncertainties around Trump's reciprocal tariffs plan and its subsequent announcement this week have come as a jab in the arm for international gold prices, which have been moving northwards for a considerable period.
Gold prices extended gains to hover near all-time highs of USD 3,201 per ounce on the day Trump announced the reciprocal tariffs, and analysts believe safe-haven gold prices will remain elevated over a possible escalation in the trade war.
Publicly available data showed that gold prices rose at an unprecedented pace in 2025, soaring over 20 per cent. Over the past year, they have risen about 40 per cent.
NS Ramaswamy, Head of Commodities at Ventura, said the immediate reaction to the announcement of 'Liberation Day' tariffs is based on elevated inflation concerns and the health of the US economy.
"Further the geopolitical and economic instability is boosting gold's safe haven appeal. Meanwhile due to the economic slowdown and recession/stagflation fear creeping, the Central Banks demand for gold is likely to rise from the 10 per cent average reserves held in gold," NS Ramaswamy said.
Ashokbhai Minawala, a prominent jeweller based in Mumbai's Zaveri Bazaar, said the industry has to wait and watch how the government reacts to the Trump tariffs.
"People working in the domestic gems and jewellery markets remain unaffected, but players in the export market will find it difficult to operate. Tariffs at 26 per cent are unsustainable," said jeweler Ashokbhai Minawala.
World Gold Council also painted a similar picture for India's gems and jewellery sector.
"Higher duties could have adverse implications for exports, including for the gems and jewellery sector. This sector accounts for a little over 12 per cent of India's exports to the country. The impact of this would become clearer in the coming period when the item-wise tariff details get notified," said Sachin Jain, Regional CEO of India at the World Gold Council.
With uncertainty in global trade, demand and price for gold went up significantly as a safe haven.
"Gold hit a record high, as nervous investors rushed towards safe-haven assets after US President Donald Trump announced more aggressive-than-anticipated tariffs against major trading partners, widening the global trade war," said Manav Modi, Senior Analyst, Commodity Research at Motilal Oswal Financial Services.
For India, however, it's a big setback.
"While in the broader sense, it will be 26 per cent. The Gems and Jewelry sector will be the most affected as import tariffs may be up to 20 per cent from the current 0 per cent on loose diamonds and 5.5-7 per cent on gold jewelry. The US is one of India's largest jewelry export markets, accounting for almost 30 per cent of the share. Indian jewelry exports to the US are over USD 11 billion per year," said Colin Shah, MD, Kama Jewelry.
Shah suggested that the Indian government should work at lowering tariffs on US goods exported to India.
"Efforts should be made to rationalise import duty as well as balance trade with all major nations. Import duties help protect local industries, but the retaliatory tariffs will end up negating this step by most governments," Shah said.
Gold prices crossed the USD 3200 mark after the Trump reciprocal tariff announcements.
