Gold and Silver Price Outlook: Navigating Market Volatility and Geopolitical Risks
According to Praveen Singh, Senior Fundamental Research Analyst for Currencies and Commodities at Mirae Asset Sharekhan, gold prices are likely to exhibit a bearish bias in the near term, while the silver market remains exceptionally tight. This analysis comes amid significant fluctuations in precious metals, driven by conflicting signals and geopolitical developments.
Gold Performance and Recent Trends
Spot gold has been trading within a range of $4700 to $5100, showcasing substantial volatility. In the week ending February 13, it fluctuated between $4878 on February 12 and $5120 on February 11. A sharp decline of over $200 occurred on February 12 following a Bloomberg report about a Russian memo suggesting a return to the US Dollar and potential strategic deals with the US in areas like natural gas and critical minerals. However, prices quickly rebounded as neither Russia nor the US officially commented on the document.
By the end of that week, spot gold closed with a weekly gain of 1.54% at $5042, marking its highest weekly close ever. Liquidity was thin on February 16 due to the US Presidents’ Day holiday and China's Lunar New Year celebrations, which last until February 23. At the time of writing, gold was trading at $4992, down nearly 1% for the day, as investors adopted a cautious stance ahead of the second round of US-Iran talks scheduled to begin in Geneva on February 17. On the MCX, April gold futures were at Rs 154,800, down 0.70% for the day.
Geopolitical Developments Impacting Markets
The resumption of indirect talks between the US and Iran in Geneva on Tuesday is a key focus. Israeli Prime Minister Netanyahu has proposed terms including restrictions on Iran's nuclear enrichment capabilities and ballistic missile range, citing MTCR limitations of 300 kilometers. The US is increasing its military presence near Iran, with the nuclear-powered aircraft carrier Abraham Lincoln positioned in the Arabian Sea off Oman and the USS Gerald R. Ford being redirected to the Middle East.
In response, Iran's Islamic Revolutionary Guard Corps began military exercises in the Strait of Hormuz, a critical waterway for global oil transport. Additionally, US-led talks to end the war in Ukraine are set to start in Geneva, though they are expected to face challenges.
Regulatory Warnings and Market Indicators
Authorities in Shenzhen, China, have issued warnings against illegal gold trading activities, including apps offering leverage to retail investors and online promotions making exaggerated claims about gold price surges. They also cautioned against adulterating materials to resemble pure gold.
As of February 13, global gold ETF holdings stood at 100.13 million ounces, up approximately 1.18 million ounces year-to-date, hovering near the highest levels since August 2022. Registered COMEX gold inventory dropped to 17.57 million ounces, the lowest since February 13, 2025, down over 27% from the peak of 24.25 million ounces in April last year.
Economic Data and Market Sentiment
Recent economic data has been mixed. Japan's annualized fourth-quarter GDP came in at 0.2%, below the estimate of 1.6%, while the UK's fourth-quarter GDP was 0.1%, slightly trailing the forecast of 0.2%. In the US, the January nonfarm payroll report showed 130,000 jobs added, exceeding the forecast of 65,000, with the unemployment rate falling to 4.3%. However, benchmark revisions cut 862,000 jobs in 2025, indicating the worst job growth since 2003 outside of crisis periods.
US retail sales stagnated in December, and CPI data for January was subdued, with headline CPI rising 0.2% month-over-month and core CPI up 0.3%. Despite this, no rate cut is expected in March. The US Dollar Index posted a weekly loss of 0.75% to 96.91, weighed down by cooler-than-expected CPI data, and was trading at 97.05 at the time of writing.
CFTC Positioning and Upcoming Events
According to CFTC data, money managers decreased their bullish gold bets by 400 net-longs to 93,038 in the week ending February 10, the least bullish position in 16 weeks. Long-only positions fell to 116,157, the lowest in over 23 months.
Key upcoming events include:
- FOMC minutes on February 19
- S&P PMIs, real personal spending, PCE Price Index, and University of Michigan consumer sentiment on February 20
- Eurozone and UK PMIs on February 20
- UK job report on February 17 and CPI on February 18
- Japan's national CPI data on February 20
Gold Price Outlook and Forecast
In the short term, geopolitical developments will be the primary driver of gold prices. Despite encouraging job data and easing geopolitical concerns, gold appears somewhat extended at current levels, though tech sector worries limit downside risks. The US Dollar Index struggles for upward momentum as yields fall.
A potential deal with Iran may face obstacles, providing support for gold at lower levels. Overall, gold is expected to range trade with a slight bearish tilt unless tensions escalate further. Support levels are around $4900 (MCX Gold April 152,000), with breaches potentially targeting $4850 (Rs 150,300) or $4740 (Rs 147,000). Resistance is at $5050 (Rs 156,500) and $5125 (Rs 159,000).
Silver Price Outlook and Forecast
The silver market in China remains tight, with a backwardation of 354 Yuan/Kg in near-to-second month spreads. However, silver faces pressure from possible easing geopolitical tensions and a firmer US Dollar. In the near term, silver may trade between $70 (Rs 218,000) and $84 (Rs 262,000). A decisive break below $70 could lead to tests of the $64 (Rs 200,000) support level.
Disclaimer: Recommendations and views provided by experts are their own and do not represent the views of The Times of India.
