Gold prices are witnessing consolidation, according to Manav Modi, Senior Analyst, Commodity Research at Motilal Oswal Financial Services Ltd. The precious metal extended last week's decline, hovering near one-month lows as a stronger US dollar and a sharp surge in crude oil continued to pressure market sentiment.
Key Factors Influencing Gold
The rally in oil, driven by escalating US-Iran tensions and ongoing disruptions in the Strait of Hormuz, has heightened fears of an energy-led inflation shock. This reinforces expectations of a prolonged higher interest rate environment. Major central banks, including the Federal Reserve, European Central Bank, Bank of England, and Bank of Japan, have signaled a cautious to hawkish stance, weighing on bullion. While intermittent optimism around diplomatic talks between the US and Iran offered limited support, uncertainty remains elevated as negotiations stay fragile.
Market Outlook
Looking ahead, markets will closely track global Purchasing Managers' Index (PMI) releases and US labor market data for further direction on inflation and policy outlook. These indicators will provide crucial insights into economic health and potential monetary policy adjustments.
Technical Analysis of Gold
Gold is showing signs of consolidation after a sharp corrective decline, with prices stabilizing near the lower half of the Bollinger Band structure. The recent rebound from the lower band around 138,000–140,000 indicates strong buying interest at lower levels. However, the inability to reclaim the middle band near 152,200 suggests the broader trend remains neutral to mildly bearish.
Bollinger Bands are gradually narrowing, pointing toward a potential range-bound phase before a breakout. This technical pattern often precedes significant price movement, and traders should watch for a decisive move.
Support and Resistance Levels
- Immediate resistance is placed at 152,200–155,000 (mid to upper band zone), with a stronger ceiling near 170,000.
- On the downside, support is seen at 149,200, followed by a key base around 145,000 and major support near 139,000.
A sustained move above the middle band could shift momentum higher, while rejection may keep prices confined within the current range this week. Traders should monitor these levels closely for potential entry and exit points.
(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 Bharat Horizon.)
