Gold's comeback: Why the world is turning to the yellow metal in 2025
Live Events
1) US-China tariff negotiations
2) Confidence in the US dollar
3) Fed autonomy & US interest rates
What do North America, Europe, and Asia have in common right now? Well, apart from unnerving stock market volatility, it's their preference for gold. According to data from the World Gold Council, flows into Gold Exchange Traded Funds from these regions touched $21 billion in Q1 2025 — the largest quarterly inflow since the first quarter of 2022.Despite the many economic and geopolitical differences between the regions, investors seem to agree on one thing — the relevance of gold in investment portfolios . And they have good reason to.To recap, President Trump' s aggressive trade policies have stoked inflationary and recessionary fears in the United States, as well as world over, as disrupted supply chains and trade relations are expected to put upward pressure on commodity prices and hurt trade and commerce. Stock markets have sharply corrected in response.Usually, such equity market upheavals trigger a flow of investor money into the US dollar, US government bonds and gold which are considered relatively stable avenues to park funds. But this time, considering the policy uncertainty and grim economic outlook in the US, investors have been shunning US based assets and opting for gold and other leading international currencies and bonds. The result has been the remarkable ~25% rally in gold prices since the start of this calendar year - which has not only been rewarding from a returns perspective but has also cushioned multi-asset portfolios from sharp drawdowns.Now with Akshaya Tritiya 's gold-buying tradition around the corner, the question is what next for gold? Has gold run up too much and is a correction on the cards? Or is the outlook still promising? Well, three key global factors are set to impact international gold prices and in turn domestic gold prices in the near to medium term:With the two largest economies embroiled in a tit for tat trade war, a mutually beneficial trade deal will not be easy to arrive at. If unexpectedly productive negotiations ease tensions, gold prices may face pressure in the short run. But if there is a prolonged period of friction or if talks collapse and tensions escalate, risk sentiment will be hurt, stock markets may tumble and gold will continue to benefit.The United States has been the leader of the liberal, globalized world. But that seems to be changing with the country, under Mr Trump's presidency, opting out of geopolitical partnerships, international cooperation agencies as well as free trade agreements. This has put a question mark on the US's and thus US dollar's hegemony.This decline in confidence has been underway since the Russia-Ukraine war broke out and led the US to freeze Russia's US-based assets. This made other countries nervous about holding reserves in the form of US assets and resulted in a strategic change to diversify reserves away from the US dollar and into gold.Global central banks have bought over 1,000 tonnes of gold for three consecutive years since 2022, and the buying momentum is strong in 2025 too, creating a structural tailwind for gold prices. If policy making in the US continues to increase trust deficit, dollar assets held by foreigners may leave US shores where gold can be one of the beneficiaries.The US central bank - the Federal Reserve - which determines US interest rates is in a tricky spot. With higher tariffs on imported goods, inflation in the US is expected to go up. At the same time, expectation of higher prices is likely to slow down consumption of goods and services and the policy uncertainty is expected to weigh on business sentiment – both slowing down the economy.If the Fed were to cut interest rates now, inflation could get fired up on the back of lower borrowing costs. But lower borrowing costs are needed to support consumption and business investment and avoid a US recession. With President Trump pressuring the Fed to cut rates, Fed independence is in question, and lower US interest rates and thus potentially higher US inflation are on the horizon – both being bullish for non-yielding gold.So, while gold has taken a breather for now, fundamentals are looking supportive of gold and investors would do well to buy the dip this Akshaya Tritiya. A 10-15% portfolio allocation to Gold Exchange Traded Funds or via the Gold Savings Fund is ideal to navigate this complex geopolitical and macroeconomic environment, marked with equity market volatility. Because as POTUS recently said, 'he who owns the gold makes the rules.'(Author of the article is Chirag Mehta , CIO at Quantum AMC): Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Time of India
34 minutes ago
- Time of India
Insurance firm directed to pay 11L for unfair trade practice in settling claim
Raipur: The Chhattisgarh state consumer disputes redressal commission directed an insurance firm backed by a public-sector bank to pay Rs 11,16,801 to a Raipur-based firm for deficiency in service and unfair trade practice in settling a vehicle insurance claim. The commission also awarded Rs 50,000 for mental agony and Rs 5,000 towards litigation costs. The order, passed by President Justice Gautam Chourdiya and Member Pramod Kumar Varma, set aside an earlier ruling by the District Consumer Disputes Redressal Commission, Raipur, which dismissed the complaint as premature. The commission noted that keeping the claim pending for an extended period, especially after the damaged vehicle was handed over as per the insurer's instructions, amounted to deficiency in service and unfair trade practice. "After accepting the surveyor's assessment, instructing disposal of the damaged vehicle, and its actual disposal, it was improper for the insurer to raise further objections. Keeping the claim pending despite receiving the wreck value amounts to deficiency in service and unfair trade practice. The insurer is liable to pay the remaining Rs 11,16,801, along with compensation for mental agony and litigation costs. The district commission erred in holding the claim premature, making its order unsustainable and liable to be set aside," remarked the consumer commission on the case. The firm's car, insured with the insurance firm, met with an accident on Nov 8, 2019. The insurance company assessed the loss at Rs 11,16,801 and instructed the complainant to hand over the damaged vehicle to a salvage buyer, who paid Rs 13,30,000. The firm alleged that despite these actions and assurances of payment, the remaining amount of Rs 11,16,801 was not disbursed. A complaint was filed before the district commission seeking the balance amount and compensation. The insurance firm, in its defence, said that the claim was pending as the complainant did not provide clarifications and relevant documents regarding the incident. The state commission, however, observed that the insurer already acted upon the surveyor's settlement recommendation and instructed the disposal of the vehicle's wreckage. The commission noted that after proceeding towards settlement and the disposal of the wreckage, it was improper for the insurer to raise further objections. The insurance company has been directed to pay the remaining assessed loss of Rs 11,16,801 with 6% annual simple interest from the date of filing the complaint until realisation, along with the compensation and litigation costs.
Time of India
39 minutes ago
- Time of India
Banks begin slashing lending rates after RBI's rate cut; home, small business loans to get cheaper
Mumbai: Banks have started to reduce lending rates, passing the benefit of the Reserve Bank of India's reduction of repo rate. This is expected to benefit home loan borrowers as well as small businesses, as most of these loans are linked to external benchmarks like the RBI's repo rate. Bank of Baroda and Punjab National Bank reduced repo-linked lending rate by 50 basis points each. Bank of Baroda's revised repo-linked lending rate (RLLR) now stands at 8.15% compared to 8.65%, while PNB's RLLR has come down to 8.35% from 8.85%. Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like NYC Hotel Smartphone Booking | Bookmark Now! | New York City Hotel Booking | Mill Canyon Road Click Here Undo However, PNB has kept the marginal cost of fund-based lending rate (MCLR) unchanged. Kolkata-based UCO Bank announced 10 basis points reduction in MCLR. The revised MCLR now stands in the range of 8.15-9.00%. On Friday, the central bank slashed the repo rate by 50 basis points, taking the total reduction to 100 bps since February. Live Events
Time of India
39 minutes ago
- Time of India
KKR-backed IVI to buy ART Fertility Clinics for $450 million
KKR-backed IVI RMA Global, a US-based leader in infertility treatment, is set to acquire ART Fertility Clinics for $400-450 million, according to people familiar with the matter. The acquisition marks a significant step in IVI RMA's global expansion, adding India to its presence in over 15 countries and more than 190 clinical offices across the US, Europe and Latin America. Both parties are in the final stages of documentation for a shareholders' agreement and are hoping to wrap up the transaction by June end. As with private hospitals, the IVF industry in India too is witnessing consolidation as several private equity funds have been aggressive with acquisitions. In 2023, Swedish fund EQT Partners acquired a significant majority stake in Indira IVF, the largest provider of fertility services in India and top five globally in terms of annual IVF cycles, at a $1.1 billion ('9,000 crore) valuation. ART Fertility Clinics began in 2015 as IVI Middle East, an international arm of IVI RMA Global. In 2020, IVI RMA divested the business to Gulf Capital, which rebranded it as ART Fertility Clinics. Since then, the brand has rapidly grown, expanding across West Asia and India. Live Events With clinics in Abu Dhabi, Dubai and Al Ain in the UAE as well as 11 centres across India, ART Fertility has established itself as a high-performance network in reproductive medicine. The Indian expansion began in 2021, backed by a $30 million investment from Gulf Capital. ART Fertility operates in big Indian cities including Mumbai, Noida, Ahmedabad, Chennai, Hyderabad, Gurgaon and Faridabad. Led by Suresh Soni, former co-founder and CEO of Nova IVF Fertility, ART Fertility reports a pregnancy success rate of 70% and has recorded over 5,000 successful pregnancies in under nine years. According to sources, ART Fertility posted revenue of $100-120 million in FY25, with an estimated Ebitda of $35 million. "For an Indian healthcare player, a $25-35 million ebitda which is borderline ebitda positive coming from the Middle East would add no value," said a fund manager at a Mumbai-based private equity firm that operates a pan-India IVF chain. "However, IVI being a US player where multiples are low, adding a Middle East business works well." IVI RMA trumped a rival bid by Temasek-backed Cloudnine Hospitals. A KKR spokesperson declined to comment. IVI RMA and ART Fertility did not respond to queries. Moelis is the advisor in the transaction. India is rapidly emerging as one of the world's fastest-growing markets for Assisted Reproductive Technology (ART). However, the sector has scope for expansion at 210 IVF cycles per million people, compared with 1,200 in the US and over 2,000 in Europe. Infertility affects approximately 15% of Indian couples, a figure expected to rise due to lifestyle factors such as poor diet, stress, late marriages, and pollution. According to EY, India's IVF market is expected to grow from $793 million in 2020 to $1.45 billion by 2027, at a projected CAGR of 15-20%. India sees around 300,000 IVF cycles annually, with projections suggesting this could grow to 500,000-600,000 cycles by 2030. About 30% of the market is controlled by 10-15 organised players, while the remaining is fragmented among smaller, unorganised clinics. Key players in India's fertility sector include Indira IVF, Nova IVF, Oasis IVF, Bloom Fertility Centre, Bengaluru-based Milann, Morpheus IVF, Ridge IVF, Akanksha IVF and Bourn Hall Clinic. Nova IVF, the second largest player in India, is owned by Asia Healthcare Holdings (AHH), the single specialty hospitals platform backed by GIC and TPG. Similarly, homegrown PE fund Kedaara Capital owns a minority stake in Oasis Fertility, while Brussels-based fund Verlinvest owns a controlling stake in Ferty9 F, a premier chain of fertility clinics in the AP/Telangana region.
