Gold is trading above $3,300 on Thursday, setting a new record high for the yellow metal. The gold price today in India is Rs 95,580 and is inching steadily towards Rs 1 lakh for 24 carat gold. The 1-gram 22-carat gold price today is Rs 87,860. In the international market, gold is at $3,333 and looks to go higher at least in the short term, unless the reasons for which gold is rising change.

And, here’s why gold is having a bull run after many decades. The rising unpredictability of US trade policy and weakening of the US dollar are leaving investors with no other viable option but to park funds in gold. The US Treasury market is also showing signs of weakness, leaving gold as one of the most important safe-haven assets in the market.

China is turning out to be a big buyer of gold in recent times. China’s gold reserves have been steadily expanding, which has kept gold prices high. From January to March 2025, China’s overall reserves increased by 2.3% to US$3.5 trillion. In the first quarter of 2025, China reported purchasing 12.8 tonnes of gold.

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The US-China trade war is in full swing. To make things worse for China, the US President Donald Trump has launched an investigation into imposing new tariffs on vital minerals, deepening the trade conflict with China immediately after making concessions on automobiles and electronics.

The move expanded ongoing investigations into copper, medicines, lumber, and semiconductors, broadening the scope of tariffs on crucial items that the US has limited capacity to produce.

“The US dollar has been falling sharply as investors fear that the US-China trade war will be more severe for the US economy than for the rest of the globe,” says Dr. Renisha Chainani, Head – Research at Augmont.

A worldwide recession appears to be on the horizon, and investments in gold have historically proven beneficial in such circumstances.

While a recessionary outlook, weakness in the dollar and US Treasuries continue to be the tailwind for the gold price to move higher, the US Fed chief’s outlook on inflation is the immediate speed-breaker if rates are not cut aggressively in 2025.

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Speaking in Chicago, Chair Powell warned that rising tariffs could boost inflation and slow growth, undermining the Fed’s attempts to balance price stability and employment. During stagflation, when the inflation rate rises and growth slows down, gold is the asset that shines. “Gold is also receiving support after Fed Chair Powell stated that a weaker economy and high inflation could conflict with the central bank’s two aims, resulting in stagflation,” adds Dr. Chainani.

The only silver lining supporting higher gold prices is the fall in inflation globally. At some point, the US Fed will have to start cutting rates in 2025, which will boost the gold price to higher levels.

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