Trump's tariff blocked: Is it the right time to move money from gold to stocks? EXPLAINED

Mint

29-05-2025

The Indian stock market benchmark indices, Sensex and Nifty 50, traded higher on Thursday mirroring upbeat sentiment in global equities after a US federal court blocked President Donald Trump's tariffs from going into effect.
Putting on hold the country-specific reciprocal tariffs imposed by Trump on the US's trading partners, the Manhattan-based Court of International Trade said the US Constitution gives Congress exclusive authority to regulate commerce with other countries that is not overridden by the president's emergency powers to safeguard the US economy.
The decision sparked a global rally in equities and commodities, with the notable exception of gold, which lost its safe-haven appeal as risk appetite improved.
Gold prices declined sharply, hitting their lowest levels in over a week. Spot gold price fell 0.6% to $3,271.17 per ounce, while US gold futures dropped 0.8% to $3,268.20. Domestically, MCX gold rate also tracked the decline, trading 0.61% lower at ₹ 94,701 per 10 grams.
'Gold prices remain under pressure amid improving risk sentiment. The blocking of Trump's tariffs supports crude and base metal prices, but weakens the outlook for gold prices,' said Ajay Kedia, Director of Kedia Advisory.
Kedia noted that gold prices have repeatedly failed to breach the ₹ 96,000 – ₹ 96,500 resistance zone. 'A weekly close below ₹ 95,000 may open the door for further downside toward ₹ 92,200. Major support is seen at ₹ 89,500,' he added.
Mohit Gulati, CIO and Managing Partner of ITI Growth Opportunities Fund, cautioned against reading too much into the market's rally. 'The recent ruling has triggered a risk-on sentiment, but beneath the surface lies deeper instability. The US' oscillation between protectionism and liberalization has eroded its credibility,' he said.
Gulati emphasized that while investors may be tempted to rotate out of gold and into equities, the unpredictability of global economic policy reinforces gold's role as a hedge against systemic volatility.
'While stocks may see a temporary bounce, gold's shine will persist as a universal asset in a multipolar world. In short: the market's euphoria is a mirage, but gold's value as a manifesto against fickleness is here to stay,' Gulati said.
Prashanth Tapse, Senior Vice President (Research) at Mehta Equities, also pointed to the potential for a short-term rally in equities following the US court decision.
'The verdict has eased immediate concerns over trade wars, lifting US stock futures and boosting emerging markets like India. However, the broader uncertainty surrounding global trade policy persists and will likely contribute to continued market volatility,' he said.
Tapse believes the next major trigger for Indian equities could be the anticipated US-India trade deal, expected in June 2025. 'That will be a key event to watch and could provide more clarity on the future trajectory of bilateral trade relations,' he noted.
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