Is gold a safe-haven investment for Indians amid Trump tariffs and US trade tensions?

Gold has once again taken centre stage as a safe-haven asset, with prices holding firm in August on the back of global uncertainty, tariff tensions, and steady festive-season demand in India. The precious metal, often seen as a hedge against inflation and market volatility, is attracting renewed interest from both retail buyers and institutional investors.

Globally, gold rose over 1% in August to trade at US$3,335 per ounce, building on July’s 0.3% gain. Analysts attribute the rally to a weaker US dollar, persistent inflation concerns, and expectations of further US Federal Reserve rate cuts. The tariff-related developments under a Trump-led administration have added to the safe-haven bid, with investors flocking to gold as a shield against potential trade wars. Year-to-date, gold has already delivered a 28% return internationally, cementing its position as one of the best-performing assets of 2025.

India's demand gains momentum

In India, gold prices advanced 1.6% in August to Rs 99,665 per 10 grams, pushing year-to-date gains to 31%. The rupee’s depreciation also narrowed domestic market discounts sharply—from US$27 per ounce in June to just US$3.7 per ounce by mid-August.

According to Aditya Birla Asset Management's note on gold prices, festive buying is emerging as a crucial driver. Manufacturers are restocking aggressively and shifting to lighter-weight jewellery designs to cater to price-sensitive customers. At the same time, investor participation is surging. Gold exchange-traded funds (ETFs) reported inflows of ₹12.6 billion in July alone, lifting assets under management by 96% year-to-date. Imports reflected the momentum too, surging to US$4 billion in July as traders stocked up ahead of the festive season.

The Reserve Bank of India, meanwhile, maintained its gold reserves at 880 tonnes, representing 12% of total forex reserves—highlighting the metal’s strategic importance at a sovereign level.

Two-year rally

The recent rally extends a remarkable two-year run. Between August 2023 and August 2025, international prices leapt from about US$1,940 to US$3,340 per ounce—an extraordinary 72% surge. In India, 24-karat gold jumped nearly 70% from Rs 59,220 to Rs 100,750 per 10 grams. On August 7, COMEX futures touched an all-time high of US$3,534.10 per ounce, while MCX futures crossed Rs 1,02,250 per 10 grams earlier this month.

The drivers are clear: sticky global inflation, heightened geopolitical risks, and strong central bank demand. While inflation has cooled from its 2022 peak, it remains above pre-pandemic levels. Central banks, wary of tipping economies into recession, appear cautious about keeping rates elevated, fuelling expectations that monetary easing will further support gold.

Expert view

“Gold has historically served as a reliable store of value, especially in uncertain political and economic environments such as renewed tariff tensions under a Trump-led regime,” said Yash Sedani, Assistant Vice President, Investment Strategy at 1 Finance. “But gold should not be treated as a one-size-fits-all solution. A tactical and personalised asset allocation, aligned with one’s risk appetite and goals, is essential. Gold ETFs, in particular, are cost-efficient, liquid, and better suited for investors looking at value preservation without concerns about storage or resale.”

Outlook

With trade wars, tariffs, and volatile capital flows back in the spotlight, gold’s safe-haven appeal is unlikely to fade soon. For Indian investors, the combination of festive jewellery demand, resilient ETF inflows, and global uncertainty makes gold a compelling portfolio diversifier. However, experts caution that it should complement, not dominate, investment strategies—ensuring balance in an increasingly unpredictable world.