Gold prices have been on a downward trend as geopolitical tensions ease, particularly following recent developments in the Middle East. Analysts are observing that this weakening bias may continue after a turbulent week, during which gold experienced significant fluctuations.
The recent stabilization of relations between Iran and Israel, marked by an agreement for a complete ceasefire announced by US President Donald Trump, has contributed to a cooling off of gold prices. This decline in demand for gold as a safe haven asset was also influenced by mixed policy moves from global central banks. While the US Federal Reserve has signaled a cautious approach, opting to pause on rate cuts due to stagflation concerns, other central banks like the Swiss Bank have made cuts, with the Bank of England and Bank of Japan maintaining their current policies.
Last week saw gold reach an all-time high on the Multi Commodity Exchange (MCX) amid rising tensions, particularly following Israel’s military actions aimed at Iran. However, with the recent truce, prices have retreated. Investors are now closely watching Federal Reserve Chair Jerome Powell’s upcoming testimony to Congress, expecting comments that could provide insights into future interest rate directions.
As a result of these developments, analysts suggest that investors consider a strategy of selling on any price rallies in the coming weeks. On the MCX, gold is anticipated to test support levels between Rs. 95,200 – 94,800 per 10 grams with current prices around Rs. 97,240. In international markets, gold is currently at approximately $3320 per ounce, with a critical support level at $3270 to watch for further declines to $3225 – $3220 per ounce.
This situation presents a cautious yet hopeful outlook for investors as they navigate a period of fluctuating gold prices in light of geopolitical dynamics and central bank policies. Adjustments in strategy based on market trends could yield beneficial outcomes as calmer conditions may lead to stabilization in precious metal investments.