Gold Price Outlook: Bullish Bias Intact Despite Recent Pullback, Says Analyst
Gold prices have experienced a pullback from recent highs, but the underlying trend remains bullish, according to Manav Modi, Senior Analyst of Commodity Research at Motilal Oswal Financial Services Ltd. The yellow metal is currently hovering around $5,000, influenced by a mix of macroeconomic factors and technical indicators that suggest continued strength in the market.
Key Factors Influencing Gold Prices This Week
Several critical elements are driving gold's movement. Weaker-than-expected US inflation data has reinforced expectations of Federal Reserve easing, leading to a decline in the 10-year US Treasury yield. Market participants are now pricing in nearly 50% odds of a third rate cut by December, following inflation figures that came in 0.1% lower than estimates last week.
Recent comments from Kevin Warsh, signaling a preference for lower policy rates, have added to expectations of two 25 basis point cuts in March and June. This potential monetary easing would further compress real yields, supporting inflows into gold as a non-yielding asset.
Geopolitical risks remain elevated, with reports of Washington deploying the USS Gerald R. Ford to the Middle East amid stalled Iran nuclear talks. This development is boosting safe-haven demand for gold, as investors seek protection from uncertainty.
Meanwhile, markets are increasingly focused on the potential inflationary impact of renewed tariff threats from former President Donald Trump, alongside lingering questions over Fed credibility. Notably, gold is trading at a discount for the first time in nearly a month, even as Chinese demand strengthens. Shanghai warehouse stocks have crossed 100 tonnes, highlighting robust physical buying interest.
Technical Analysis and Market Structure
From a technical perspective, MCX Gold on the daily chart continues to maintain a broader bullish bias despite the recent pullback. The price is holding well above the key medium-term support zone near 148,000–150,000, which coincides with the 20-day moving average and prior breakout levels.
Immediate resistance is seen around 158,000–160,000, where recent highs and upper supply zones are clustered. A sustained close above this band could open the path toward fresh highs for gold prices.
Fibonacci retracement levels suggest strong structural support near the 0.382 and 0.5 zones around 139,000–134,000 on a deeper correction. This keeps the broader uptrend intact unless these levels are decisively breached.
Volume patterns indicate that the sharp spike seen during the recent sell-off was not followed by sustained heavy distribution, suggesting profit booking rather than a trend reversal.
From a Bollinger Band perspective, the price recently touched the upper band during the rally and has since cooled toward the middle band (20-SMA), indicating volatility compression and potential base formation. If the price stabilizes above the mid-band and bands begin to expand again, it would favor a continuation move higher. Conversely, a decisive break below the middle band could trigger short-term corrective pressure toward lower supports.
Focus for the Coming Week
Market attention this week will be on the FOMC meeting minutes and the PCE price index, which are key indicators for future Fed policy. The US market remains shut amidst the President's Day holiday, while China’s market is closed for the week due to the Lunar New Year celebrations, potentially affecting liquidity and trading volumes.
Disclaimer: Recommendations and views on the stock market, other asset classes, or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India.
