Gold Prices Face Short-Term Headwinds as Analysts Anticipate Medium-Term Rebound Potential

Gold Prices Face Short-Term Headwinds as Analysts Anticipate Medium-Term Rebound Potential​

Global gold prices are set to face continued downward pressure over the next month amid prevailing macroeconomic factors. However, a consensus among market analysts suggests that despite near-term volatility and technical concerns, the underlying fundamentals could pave the way for a significant rebound in the medium term.

Near-Term Pressure Grips Precious Metal Markets​

The current trend remains weak for spot gold (XAU/USD), which has declined by nearly 12 per cent this month and more than 3.5 per cent this week. While there was temporary support provided by matching US inflation data, the overall market is being weighed down by global economic conditions.

Riteshkumar Sahu, Senior Manager-Commodities Research at Kotak Neo, noted that renewed strength in the US dollar and strong US jobs data are keeping pressure on gold prices. This environment is reinforced by expectations that the Federal Reserve could still raise interest rates later this year.

Globally, reduced safe-haven demand following progress in the US-Iran peace process has also contributed to the decline, stated Ravindra Kumar of SMC Global Securities. Furthermore, concerns over AI's potential impact on global employment are adding layers to market volatility.

Technical Outlook and Price Corridors for Gold​

For spot gold (XAU/USD), immediate support is situated at USD 3,950 per ounce, with a resistance level identified at USD 4,200. A sustained move above this resistance could push prices towards the aggressive range of USD 4,600-4,800.

Conversely, if prices break below the immediate support level, they could fall into the USD 3,800 to USD 3,400 range. From a technical standpoint, spot gold has held above the key chart support near USD 3,960 per ounce and formed an inside-candle pattern.

On the domestic front, MCX Gold was trading around Rs 1,43,127 per 10 grams. The immediate downside target is set at Rs 1,34,000 to Rs 1,25,500, while resistance stands at Rs 1,45,500.

Expert Views on Downside Risks and Support Levels​

Analysts across the board have identified key technical support zones for bullion. Ravindra Kumar noted strong support for COMEX Gold near USD 3,600 per ounce. In India, SMC Global Securities set resistance at Rs 1,45,000 for MCX Gold and USD 4,400 for COMEX Gold.

Amit Gupta of Kedia Advisory acknowledged that a downside correction is probable over the next month as prices move toward support levels. However, he projects substantial upside potential within a three-month window due to persistent central bank gold purchases and gradual rupee depreciation.

Medium-Term Outlook Points Towards Rebound​

Despite the short-term caution, various experts are optimistic about a medium-term recovery for precious metals. Amit Gupta forecasts that MCX Gold could find support near Rs 1,35,000 with potential to rise towards Rs 1,60,000 over three months.

Anantha Padmanaban, Former Chairman of the All India Gem & Jewellery Domestic Council (GJC), echoed the sentiment, expecting gold prices to remain pressured for a month before recovery begins. He noted that this period might drive strong business activity at the upcoming India International Jewellery Show (IIJS) as jewellers refill inventories ahead of the festive season.

The overall narrative is one of cautious trading: investors are monitoring Federal Reserve officials and US consumer sentiment data while waiting for fresh directional triggers to ignite a potential upward move in gold prices.