Gold Price Prediction: Geopolitical Tensions and Economic Factors Drive Volatility
Gold prices are expected to experience significant volatility this week, driven primarily by escalating tensions in the Middle East and ongoing developments involving the United States, Israel, and Iran. According to Manav Modi, Senior Analyst of Commodity Research at Motilal Oswal Financial Services Ltd., these geopolitical factors are likely to keep the precious metal market on edge, with safe-haven demand playing a crucial role in price movements.
Recent Market Rally and Geopolitical Escalation
Last week, both gold and silver rallied to over three-week highs, fueled by heightened geopolitical risks and renewed trade uncertainty. The surge in prices was partly triggered by a US Supreme Court decision that struck down a broad range of tariffs imposed by former President Donald Trump, which weakened the administration's emergency trade powers. In response, the White House swiftly introduced a temporary 10% global tariff, with plans to increase it to 15%, adding to market nervousness.
Safe-haven demand intensified as tensions between the US and Iran escalated dramatically. After three failed talks in February, the situation turned into direct military action, with the US and Israel launching attacks on Iran that resulted in the death of Iranian leader Khamenei. In retaliation, Iran targeted neighboring countries such as the UAE, Dubai, and Riyadh, as well as tankers in the Strait of Hormuz. These events have significantly boosted investor interest in gold as a protective asset.
Silver also saw notable activity, with significant inventory drawdowns on COMEX indicating tightening supply. While a softer US dollar provided some support for bullion, gains were limited by the Federal Reserve's commitment to maintaining higher interest rates for a prolonged period and resilient US economic data.
Technical Analysis and Price Outlook
From a technical perspective, MCX Gold remains in a strong uptrend on the daily chart. Prices are trading above key moving averages and are hugging the upper Bollinger Band, which suggests sustained bullish momentum. A recent breakout above the 1.618 Fibonacci extension zone near 1,71,800 points to potential continuation toward the 1,75,000–1,78,000 range in the coming sessions.
Immediate resistance is positioned around 1,70,000–1,72,000, while strong support levels are seen at 1,61,800, followed by 1,55,000, which corresponds to a previous consolidation zone. As long as prices maintain a hold above the mid-Bollinger band, the bias remains positive. However, any sharp pullback toward 1,62,000 could attract fresh buying interest during the week, providing opportunities for investors.
Key Factors to Watch This Week
The focus for this week will be on several critical economic indicators and geopolitical updates. Manufacturing PMI data and US jobs market reports will be closely monitored for insights into economic health and potential impacts on monetary policy. Additionally, any signs of de-escalation in the Middle East or new developments from the US or Iran could trigger further volatility in gold prices, making it essential for traders to stay informed.
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.
