The gold market witnessed significant bullish momentum last week, logging a notable gains following signals of de-escalation in the US-Iran tensions. This development, coupled with easing inflation fears, has been the primary catalyst supporting the precious metal's upward trajectory.
Gold prices on the Multi Commodity Exchange (MCX) rose from ₹ 1,49,650 per 10 gm to ₹ 1,52,690 per 10 gm last week. This marks a weekly gain of around 2% for the second consecutive session. On the global front, the COMEX gold rate climbed from $4,679.70/oz to $4,787.40/oz, registering a nearly 3% weekly gain.
Drivers Fuelling Gold’s Rally Amid Geopolitical Easing
Market experts suggest the rally is underpinned by a confluence of global factors. The easing of tensions in the Middle East has elevated hopes for lower interest rates globally.David Meger of High Ridge Futures noted that as Middle East tensions de-escalate, there are higher expectations of potential rate cuts. This dynamic has exerted downward pressure on the US dollar, which in turn provides support to gold prices.
Furthermore, market analysis points to falling crude oil prices, particularly following the de-escalation buzz. Anuj Gupta highlighted that lower oil prices put pressure on the US dollar, fueling speculation regarding US Federal Reserve rate cuts.
Key Factors Supporting Long-Term Gold Demand
Despite short-term volatility, fundamental analysis suggests the underlying case for holding gold remains robust. Experts point to persistent global structural risks that favor hard assets.Three major pillars support this long-term demand. First, elevated sovereign and corporate debt burdens continue to sustain appetite for hard assets as hedges. Second, persistent inflation risks are embedded in the global economic structure, even if there is cyclical moderation.
A third crucial factor is the enduring skepticism regarding the stability of fiat currencies. This, combined with the fragmented geopolitical environment, reinforces gold's role as the ultimate safe-haven store of value.
Analyzing Technical Levels: Should Investors Buy Now?
Market commentary suggests caution alongside the prevailing bullish sentiment. Ponmudi R of Enrich Money advises that while safe-haven demand is visible, it has not yet reached a level strong enough for a decisive breakout.For the COMEX gold rate, the current trading range is noted as $4,750-$4,800. Analysts suggest that a sustained move above $4,820 would be necessary to extend gains towards $4,860 and potentially $4,900.
On the Indian market, a sustained upward move above ₹ 1,53,000 is cited as a trigger to revive bullish momentum towards ₹ 1,55,000. Conversely, a break below ₹ 1,52,000 could drag prices towards the ₹ 1,50,000 and ₹ 1,48,000 zones.
The Influence of Interest Rates and Dollar Weakness
The relationship between US dollar weakness and interest rate expectations is central to gold pricing. Market observers are closely watching for confirmation on inflation trends and future monetary policy shifts.The overall trend appears technically stable, though momentum remains subdued near the crucial levels. The near-term direction is projected to depend heavily on fresh catalysts, especially geopolitical developments and the trajectory of the US dollar index.
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