Gold Prices Face Intense Selling Pressure Amid Global Tensions, Analyst Warns
Gold is experiencing intense selling pressure, and this trend is likely to continue throughout the week amid escalating global tensions, according to Manav Modi, Senior Analyst of Commodity Research at Motilal Oswal Financial Services Ltd. The precious metal has witnessed a sharp decline, marking one of its worst performances in recent years, as rising inflation concerns and expectations of prolonged higher interest rates have significantly outweighed safe-haven demand.
Geopolitical Tensions and Economic Factors Driving Gold's Decline
Escalating tensions in the US-Israel-Iran conflict have pushed crude oil prices above the critical $100 per barrel threshold, fueling widespread fears of sustained energy-driven inflation. Central banks worldwide have maintained a cautious monetary stance, with the Federal Reserve holding interest rates steady while signaling persistent inflation risks, and other institutions like the Reserve Bank of Australia implementing rate hikes. A stronger US dollar and rising bond yields have further pressured bullion prices, creating a challenging environment for gold investors.
Despite intermittent stability from easing oil prices, financial markets have shifted away from earlier expectations of interest rate cuts, severely limiting gold's upside potential amid persistent geopolitical uncertainty. The focus this week will be on Preliminary Purchasing Managers' Index (PMI) reports from major global economies, which could provide further direction for precious metal markets.
Technical Analysis Reveals Bearish Structure
From a technical perspective, gold has turned significantly weak following a sharp breakdown from its recent consolidation range. Prices have slipped decisively below the middle Bollinger Band, which corresponds to the 20-period simple moving average, indicating a clear loss of bullish momentum. The metal is now approaching the lower Bollinger Band, suggesting increased downside volatility in the coming sessions.
The recent price action resembles a distribution top pattern followed by a breakdown, confirming a short-term bearish structure. Volume expansion during the decline indicates strong selling pressure from institutional and retail investors alike. Unless prices can reclaim the Rs 145,000 level quickly, the bias remains firmly in favor of selling on any price rises throughout the week.
Key Resistance and Support Levels to Watch
The immediate resistance for gold is seen near the Rs 142,000 to Rs 145,000 range, which aligns with the middle Bollinger Band and a prior support zone that has now turned into resistance. A stronger resistance level is placed at Rs 150,000, where repeated price rejections were observed earlier in the trading cycle.
On the downside, key support lies around the Rs 136,000 level. A decisive break below this critical support could extend the fall toward the Rs 130,000 to Rs 128,000 range. Market participants should monitor these levels closely as they will determine the next directional move for gold prices in both domestic and international markets.
Disclaimer: Recommendations and views on financial markets, asset classes, or personal finance management tips given by experts are their own. These opinions do not represent the views of any particular financial institution or media organization.
