Gold prices are expected to remain range-bound in the coming week as investors track major central bank meetings, developments in US-Iran negotiations and movements in crude oil prices, according to analysts. Market participants will closely monitor policy decisions by the Bank of Japan, the US Federal Reserve and the Bank of England, along with inflation readings from the UK, the Eurozone, Germany and Japan for clues on the global interest-rate outlook. The fate of the proposed US-Iran agreement will remain one of the most important drivers for bullion markets, as noted by Pranav Mer, Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd. 'A close eye will remain on the finalisation of the US-Iran deal. If signed, then we may see an extended rally in risk assets that may lift gold and silver as well. However, any escalation would be negative for markets,' he explained. Gold recovered some losses towards the end of the week, with prices rebounding more than 5% after the US dollar weakened and bond yields fell amid reports that a US-Iran peace agreement could be signed soon, though uncertainty would persist until both sides formally sign the agreement.
On the domestic front, gold futures for August delivery on the Multi Commodity Exchange (MCX) declined ₹5,066, or 3.2%, during the week to settle at around ₹1.50 lakh per 10 grams. Silver futures for July delivery fell ₹2,351, or nearly 1%, to ₹2.46 lakh per kilogram. Gold prices declined sharply, falling more than 3% and testing the ₹1,48,000 per 10 gram level on the MCX, according to Jateen Trivedi, VP Research Analyst, Commodity and Currency, LKP Securities. In international markets, Comex gold futures declined USD 126.5, or nearly 3%, during the week to close at USD 4,238.8 per ounce, while silver fell USD 1.13, or 1.6%, to USD 67.97 per ounce. Gold's technical position remains bearish with price action sitting near the base of a descending channel, with resistance seen around $4,370 and support at $4,268, then near $4,220, with the year-to-date low around $4,100. Traders are watching crucial technical levels, with any rally likely facing significant resistance near the 50-day moving average around $2,345, while the recent support established near $2,285 is the key level to watch.
The primary weight on gold prices comes from firm US Treasury yields, with traders currently pricing in about a 67% chance of a U.S. interest rate hike in December, according to CME Group's FedWatch tool. US inflation accelerated in May to the fastest pace in more than three years as the war pushed up energy prices, outstripping Americans' pay gains, according to Bureau of Labor Statistics data. The consumer price index climbed 0.5% from April and 4.2% from a year earlier, the most since early 2023. While gold is seen as a hedge against inflation, higher rates typically weigh on the non-yielding metal. Bart Melek, global head of commodity strategy at TD Securities, noted that 'The market continues to worry about inflation and the possibility of restrictive policy,' adding that 'The higher possible carry and real rates are the main reason' for gold's weakness. Fed funds futures indicate a roughly 70% chance of a rate hike by December, with markets now focused on upcoming policy decisions after last week's Nonfarm Payrolls report reinforced expectations of tighter Federal Reserve policy.
Market analysts attribute the recent volatility to increasing uncertainties from conflicting headlines that are prompting investors to reduce risk exposure and raise liquidity across asset classes. As noted by Robert Gottlieb, a consultant and former precious metals trader at JPMorgan Chase & Co., 'The constant flow of conflicting headlines is increasing uncertainties and prompting investors to reduce risk exposure and raise liquidity across a range of asset classes.' The latest slump 'is more about deleveraging and portfolio repositioning, rather than a fundamental reassessment of gold as a safe-haven asset,' according to his analysis. Continued liquidation by exchange traded fund investors and expectations of a higher interest-rate environment at least through the first half of 2027 also weighed on bullion prices, as noted by analysts. The Bloomberg Dollar Spot Index, a gauge of the US currency, was 0.1% lower, reflecting broader market uncertainty amid the ongoing geopolitical tensions.
Currency markets showed mixed responses as investors position for upcoming policy decisions. The euro strengthened 0.07% against the dollar to $1.15435, recovering from two-month lows, while the Japanese yen weakened 0.12% to as low as 160.37, continuing to hover around the 160 level widely seen as a line in the sand for potential official intervention. The Australian dollar weakened 0.26% versus the greenback to $0.7027, while the New Zealand dollar strengthened 0.09% to $0.5812. Despite gold's weakness, emerging-market assets continue their recovery momentum, with Asian technology shares rebounding from steep losses earlier in the week and most currencies strengthening against the dollar. A gauge of developing-world currencies was up 0.2% as of 1:50 p.m. in New York, marking its first gain in six sessions amid losses in the greenback and oil prices. The release on Thursday of the U.S. Producer Price Index will provide investors more data to gauge the Federal Reserve's monetary policy stance, while investors will also track the G7 Summit in France, where leaders including Prime Minister Narendra Modi are expected to discuss the conflicts in Iran and Ukraine for further signals on the near-term direction of precious metals.
