India-US Deal Crashed Gold: What's Next?

On January 31, 2026, the United States and India announced a landmark trade deal that cut US tariffs on Indian goods from 26% to 18%. Within 48 hours, gold plummeted from $5,150 to $4,700—an 8.7% drop directly triggered by reduced geopolitical tensions. But here's why the relief rally in risk assets may be short-lived, and what it means for gold's trajectory.

What the India-US Deal Actually Contains

The agreement, negotiated between the Trump administration and Indian Prime Minister Modi, covers several key areas:

Source: Reuters and CNBC reporting.

Why Markets Interpreted This as Gold-Bearish

The India-US deal was significant not just for its content, but for what it signalled about the broader trade war:

• Negotiation is possible: After months of escalation-only signals (see South Korea tariffs), a deal showed the administration would negotiate.
• Risk-on rotation: Reduced trade risk meant stocks became more attractive relative to safe havens. The S&P 500 surged 3.2% on the announcement.
• Dollar strengthened temporarily: Trade deals typically strengthen the dollar, which pressures gold.
• Inflation expectations dipped: Lower tariffs mean lower import costs, reducing the inflation hedge argument for gold.

Why the Tariff Relief Probably Won't Last

Here's the crucial context that markets may be underweighting: the India deal resolves one front in a multi-front trade war. The bigger battles remain:

South Korea: Still at 25%

25% tariffs on South Korean goods remain in place, affecting $80B+ in bilateral trade. Seoul has shown no willingness to make the concessions India made (particularly on defence purchases and Russian energy).

Greenland Tensions: Unresolved

The US-EU diplomatic crisis over Greenland has not abated. Trump continues to threaten tariffs on Denmark and Norway. European gold demand remains elevated.

China: The Elephant in the Room

US-China tensions have been simmering with no deal in sight. Tariffs on Chinese goods remain at 60%+, and technology export controls are tightening. Any escalation here would dwarf the India deal's impact.

Historical Pattern: Deals Cause Dips, Not Reversals

Looking at previous trade negotiations:

The pattern is clear: trade deals cause short-term gold dips, but the structural rally resumes once markets refocus on underlying drivers.

Impact on Silver: Even More Dramatic

Silver's crash was more severe than gold's—dropping from $115 to approximately $77 (a 33% decline) before recovering. Silver's higher volatility is typical: it's a smaller market with more speculative positioning. The gold-silver ratio spiked during the crash, suggesting silver was oversold relative to gold.

Singapore Angle: India's Gold Appetite

India is the world's second-largest gold consumer after China. The trade deal has interesting implications for gold flows:

• Indian rupee strengthened: Making gold cheaper for Indian buyers—potentially increasing demand
• Reduced tariff revenue: India may compensate by raising gold import duties (currently 15%)
• Singapore as intermediary: Singapore's gold trading hub role benefits from India-US trade flows
• Supply chain shifts: India ending Russian oil purchases could redirect Russian gold flows through different channels

What Should Gold Investors Do Now?

The trade deal created a buying opportunity for those who see through the short-term noise. Here's a framework:

• Below target allocation? The dip to $4,700-5,000 offered better entry than $5,200. If you missed it, dollar-cost averaging still works at current levels.
• At target allocation? Hold. The structural case hasn't changed.
• Above target allocation? Consider rebalancing—but don't overreact to one trade deal.

For a detailed look at expert forecasts post-crash, see our $6,300 target analysis.

Frequently Asked Questions

What is the India-US trade deal and how did it affect gold?

The deal cut US tariffs on India from 26% to 18% and included India phasing out Russian oil purchases. Markets interpreted this as reduced geopolitical risk, triggering a sell-off in safe-haven assets including gold (down 8.7%) and silver (down 33%).

Will the India-US deal end the gold bull market?

Unlikely. The deal addresses one trade relationship while South Korea, China, and European tensions remain unresolved. Historical precedent shows trade deals cause dips, not trend reversals.

How did the trade deal impact Singapore gold prices?

SGD gold prices fell less than USD prices due to concurrent USD/SGD movements. UOB spreads widened temporarily but have normalised. Track live prices on our homepage.

Should I buy gold after the trade deal dip?

If you're below your target 5-15% allocation, the post-deal price ($5,000) offers better value than the pre-deal peak ($5,200). Use systematic buying rather than lump-sum timing.

What other trade deals could affect gold in 2026?

Watch for potential US deals with South Korea, the EU, and—most critically—China. Each successful negotiation could cause short-term gold dips. Conversely, breakdown in any negotiation would likely push gold to new highs.

Conclusion

The India-US trade deal was the catalyst for gold's sharpest correction since 2020. But catalysts aren't causes—the underlying market was ripe for a pullback after a 100% rally. The deal provided the excuse, not the reason.

For Singapore investors watching UOB gold prices, the key insight is this: one deal doesn't end a multi-front trade war. South Korea, China, Greenland, and Iran tensions persist. Central banks are still buying. The Fed is still cutting. The dollar is still weakening. These structural forces will reassert themselves—and gold's recovery above $5,000 already suggests they're doing so.

Stay disciplined, use dollar-cost averaging, and don't let any single headline—bullish or bearish—override your investment strategy.