Gold prices hit fresh high! Key factors behind the rally; technicals suggest resistance at THIS level

Gold prices soared to fresh all-time highs on Thursday, April 17, both in India and in global markets, as a combination of renewed geopolitical concerns, stagflation fears, and a weakening US dollar drove strong safe-haven demand. The latest rally was triggered by rising tensions in global trade, particularly between the United States and China, prompting investors to seek refuge in the yellow metal.

The escalating conflict has heightened macroeconomic uncertainty, leading to increased investor appetite for gold as a store of value. Meanwhile, concerns over slowing economic growth coupled with sticky inflation—raising stagflation risks—added to the appeal of non-yielding assets like gold.

Adding to the upward momentum, central banks across the globe have continued to diversify their foreign exchange reserves away from the US dollar, reinforcing support for gold. This strategic shift has strengthened the metal’s long-term demand outlook, contributing to the ongoing bull run.

Gold Prices Touch Record Levels

In the domestic market, the spot price of 24 karat gold reached ₹97,310 per 10 grams, while 22 karat gold was priced at ₹89,200 per 10 grams, and 18 karat gold at ₹72,990 per 10 grams. Globally, gold soared past the $3,300 mark, setting new records on the back of sustained demand for safe assets and a weakening dollar.

4 factors behind gold price rally 

The rally was triggered by a host of global factors. A steep slide in the US dollar index—set for its fourth consecutive weekly decline—has made gold cheaper for investors holding other currencies. 

At the same time, the market is grappling with the economic implications of fresh tariff announcements by former US President Donald Trump, who has raised duties on Chinese goods to as high as 245 per cent. 

Here is a look at four key factors driving gold prices higher:

1. Weakening Dollar and Trade War Fears: A falling dollar, sparked by increasing recession risks and tariff-induced volatility, is one of the biggest drivers of gold’s recent ascent. With the US dollar index dropping below the psychological 100 mark, gold has become increasingly attractive to global investors. Trump's new tariffs on critical imports and retaliatory threats from China have further undermined market sentiment.

2. Central Bank Buying Spree: Central banks, particularly in Asia, have ramped up gold buying to hedge against dollar volatility. According to the World Gold Council, global central banks added 1,037 tonnes of gold in 2024 alone—one of the largest accumulations on record. This reflects a strategic shift away from the US dollar, driven by concerns about inflation, geopolitical risk, and long-term currency stability.

3. Rising Recession Risk in the US: Fears of a looming US recession are also playing a key role. Goldman Sachs recently increased its recession probability forecast to 45 per cent. Additionally, a sharp selloff in US Treasuries is signalling waning confidence in even traditionally safe government debt. With interest rates softening, gold has once again emerged as a preferred store of value.

4. Geopolitical Risk and Stagflation Concerns: Federal Reserve Chair Jerome Powell recently cautioned that the US economy could be caught in a “stagflationary” trap, where inflation remains high even as growth slows. This has only reinforced gold’s appeal as a hedge against both economic stagnation and rising prices. Additionally, global flashpoints—from the Middle East to Eastern Europe—are contributing to risk-off sentiment, pushing more investors toward gold.

Gold Price: Technical Outlook

Despite the bullish fundamentals, some analysts are urging caution. According to Augmont Goldtech, gold has reached all bullish targets, and fresh buying may not be advisable at current levels. The firm warned that any drop below $3,330 ( ₹95,500) could trigger a pullback toward $3,280 ( ₹93,000).

Way2Wealth Brokers observed that MCX Gold formed a bullish Marubozu candlestick pattern, indicating the continuation of bullish momentum. However, they also warned that the current risk-reward setup does not favour new bullish entries. Key support levels are now at ₹94,850 and ₹93,750, with resistance at ₹97,000–97,500.

Jateen Trivedi of LKP Securities echoed a similar view, stating that gold’s momentum has been driven largely by uncertainty over tariffs and trade talks. Unless there is a diplomatic breakthrough, the metal is likely to remain elevated in the short term. He expects gold to trade in a range of ₹94,000 to ₹5,500 on the MCX.

Gold's historic surge underscores deepening concerns over the global economic landscape, with fears of recession, inflation, and prolonged trade conflicts driving investors to seek refuge in the yellow metal. While the technical outlook suggests the rally may be overextended, the absence of clear resolutions to major macro risks means gold is likely to remain in favour.

Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.