Gold Prices in Consolidative Phase Amid Mixed Market Cues
Gold prices are currently lacking an immediate bullish bias, with the market experiencing a more consolidative than corrective phase, according to Maneesh Sharma, AVP - Commodities & Currencies at Anand Rathi Shares and Stock Brokers. This comes as geopolitical tensions and central bank policies create a complex trading environment for the precious metal.
Geopolitical Conflicts Impact Market Sentiment
The ongoing conflict between Israel and Iran has introduced significant volatility into global markets. Recent developments include the United States targeting Iranian missile sites near the strategic Strait of Hormuz with 5,000-pound munitions, citing risks to shipping security. Meanwhile, Iran has reportedly launched cluster bomb attacks on Tel Aviv, escalating regional tensions.
Iran has confirmed the death of national security chief Ali Larijani, with President Pezeshkian offering official condolences. These geopolitical developments have created a complex backdrop for gold trading, initially boosting safe-haven demand but subsequently being overshadowed by other market factors.
Gold's Recent Performance and Current Trading Range
After posting seven consecutive months of gains through February, with prices rising 7-8% during that period, gold has experienced a modest decline since early March. The precious metal has remained squarely within a $5,000 to $5,200 per ounce range over the past three weeks, reflecting the market's uncertainty.
The recent pullback in gold prices appears to be a healthy retracement within the broader bullish structure rather than a corrective phase. According to technical analysis, this current decline could potentially extend to $4,870-$4,850 per ounce on a weekly basis, which experts view as a constructive area for accumulation from a longer-term perspective of one to two months.
Inflation Concerns and Central Bank Policies
Oil prices have surged to nearly $120 per barrel for the first time since 2022 as the conflict with Iran enters its third week. This energy price spike has fueled concerns about renewed global inflation, complicating the Federal Reserve's policy outlook and reinforcing expectations that interest rate cuts may be delayed.
The surge in energy prices has increased the risk of stagflation, particularly following last week's weak jobs report. Market participants anticipate downward revisions to growth forecasts, which combined with rising inflationary outlooks could resurface stagflation concerns - a scenario where gold traditionally performs well.
Dollar Strength and Bond Yields Weigh on Gold
The hawkish implications of the ongoing Middle East conflict have revived demand for the US Dollar, which recently pulled back from its highest level since May 2025. This dollar strength, combined with rising bond yields, has broadly weighed on gold market sentiment.
Safe-haven demand, which initially lifted gold prices following the eruption of US-Iran tensions, has receded due to inflation shocks stemming from the stronger dollar and higher bond yields. This has shifted investor attention toward major central bank policy trajectories.
Central Bank Decisions Loom Large
Traders are opting to wait for the outcome of the two-day Federal Open Market Committee meeting on Wednesday before placing directional bets around gold. While the Fed is widely expected to keep interest rates unchanged, its updated projections - particularly regarding inflation outlook - could significantly shift investor expectations of future rate paths.
Policy updates from other major central banks, including the European Central Bank, Bank of Japan, and Bank of England, could further influence gold prices during the latter part of the week. These central bank actions and policy stances remain critical factors that could impact gold market sentiment in the coming days.
Silver Market and Weekly Outlook
Meanwhile, silver prices tumbled below $80 per ounce last week but have recovered mildly, though direction remains unclear amid ongoing geopolitical conflict. The white metal continues to face similar headwinds as gold, with market participants awaiting clearer signals from central banks and geopolitical developments.
Weekly View: Spot gold (currently trading around $5,010 per ounce) is expected to maintain sideways movement with support persisting around $4,850-$4,870 per ounce on a weekly basis. While geopolitical uncertainties provide limited downside protection for gold, major central bank actions this week may prove to be the critical factors influencing market sentiment.
Disclaimer: Recommendations and views on financial markets given by experts are their own and do not represent the views of any particular media organization. Investors should conduct their own research before making investment decisions.
