Gold Price Prediction: Range-Bound Trading Expected Amid Geopolitical Uncertainty
Gold prices are projected to remain range-bound in the near future, according to Praveen Singh, Head of Currencies and Commodities at Mirae Asset ShareKhan. This outlook follows a period of extreme volatility driven by geopolitical developments and macroeconomic factors.
Recent Gold Performance and Market Swings
Gold prices experienced dramatic fluctuations on Monday as traders responded to evolving developments in the Iran conflict and corresponding swings in oil prices. On March 23, gold plunged to $4,099 per ounce, marking its lowest level since November 24, 2025. This decline coincided with rising global yields and oil prices, which bolstered the US Dollar amid increasing inflation concerns.
The precious metal subsequently rebounded strongly to $4,500 after the US President signaled a willingness to de-escalate tensions. The President, stepping back from earlier threats to destroy Iran's power infrastructure unless the Strait of Hormuz reopened within 48 hours, instructed US forces to postpone all strikes against Iranian energy infrastructure for a five-day period. While the administration claimed Iranian representatives had initiated talks, Iran has officially denied any such diplomatic engagement.
At the time of writing, gold was trading approximately 3% lower at $4,370 per ounce.
Historic Weekly Losses and Sustained Decline
Spot gold recorded its worst weekly performance since 1983 during the week ending March 20, plummeting 10.52% as central banks worldwide highlighted inflation risks that increased the likelihood of aggressive rate hikes. The yellow metal closed with a daily loss of 3.45% at $4,491 on March 20, extending its decline to an eighth consecutive trading day.
Gold has declined every week since the US and Israel launched attacks against Iran on February 28, reflecting sustained market pressure.
Geopolitical Context: Oil Prices and Regional Dynamics
Before President Trump's attempt to ease tensions with Iran, US allies and Gulf countries had privately warned him about the dangers of following through with his threats. These warnings emphasized that permanent damage to Iranian infrastructure could potentially create a failed state following any conflict resolution.
Trump's de-escalation efforts have introduced new risks, as Iran may interpret the success of its strategy targeting US and Israeli energy infrastructure in the Middle East as encouragement to escalate further if diplomatic talks fail. Iran could potentially target additional power structures across the region, while the US and Israel continue striking military sites within Iran. Uncertainty persists regarding Israel's strategic intentions, particularly after Iran conducted strikes near Israel's nuclear research center.
Crude oil prices tumbled nearly 15% on Monday amid de-escalation talks before recovering approximately one-third of their intraday losses.
Market Indicators: ETF Holdings and COMEX Inventory
As of March 20, total known global gold ETF holdings stood at 98.59 million ounces, with outflows continuing and year-to-date outflows reaching 0.36 million ounces. Gold and silver ETF holders have been exiting their positions since the Iran conflict began.
Registered COMEX gold inventory declined to 16.51 million ounces, the lowest level since November 6, representing a 31.91% decrease from the record peak of 24.25 million ounces observed in April 2025.
CFTC Positioning and Market Sentiment
Money managers increased their bullish gold bets by 3,684 net-long positions to 105,920 during the week ending March 17. Long-only positions rose by 5,105 lots to 131,237, reaching their highest level in seven weeks, while short-only positions increased by 1,421 lots to 25,317 lots, the highest in sixteen weeks.
Dollar Index and Yield Movements
The US Dollar Index eased as Middle East tensions showed signs of de-escalation, hovering around 99.20 at the time of writing, down nearly 0.5% for the day. Two-year US Treasury yields stood at 3.86%, declining over 1%, while ten-year yields at 4.36% were down by 1.5 basis points.
Bonds have faced pressure as central bankers express growing caution about inflation risks. Two-year yields closed at 3.89% on Friday, their highest level since July, with a weekly increase of almost 4%. Similarly, ten-year yields reached 4.39%, their highest since August 18, rising nearly 2.5% for the week.
Federal Reserve Commentary and Economic Data
Federal Reserve Bank of Chicago President Austan Goolsbee, a non-voting member, emphasized that the US interest rate outlook remains dependent on inflation dynamics. The Fed may need to raise interest rates or return to rate cuts depending on developments in the Middle East conflict.
Key US economic data scheduled for release this week includes:
- ADP weekly employment change
- Nonfarm productivity (4Q final)
- Unit labor costs (4Q final)
- S&P Global US manufacturing and services PMIs (March 24)
- Import and export price indices (March 25)
- University of Michigan Sentiment and inflation expectations (March 27)
Investors will also monitor Eurozone and UK PMIs (March 24) and UK inflation data (March 25).
Gold Price Outlook and Trading Strategy
Following President Trump's five-day ceasefire proposal, rate hike probabilities in the US, UK, and Eurozone have decreased. Interest rate curves for the Eurozone and UK now reflect approximately one fewer rate hike by year-end.
While Middle East tensions have somewhat diffused, risks persist, particularly since Iran has identified energy infrastructure as a strategic vulnerability in US defenses. Gold is expected to trade within a wide range as traders react to developments regarding Iran.
The anticipated trading range is $4,200 to $4,610 in the short term. Should risk appetite improve, bears may target the crucial support level of $4,090 once again. Traders might consider selling into rallies with stop-loss orders placed above $4,840.
Disclaimer: Recommendations and views on financial markets, asset classes, or personal finance management provided by experts are their own and do not represent the views of The Times of India.
