Gold Shines With Weekly Gain Despite Friday's Dip
In a week of contrasting trends, domestic gold prices in the futures market managed to secure a positive settlement, even after facing a selloff towards the end. The precious metal concluded Friday's trading session on the Multi Commodity Exchange (MCX) at ₹123,400, marking a single-day decline of 2.64%. This drop was primarily triggered by hawkish commentary from officials at the US Federal Reserve, which temporarily dimmed the metal's appeal.
Despite the Friday slump, the bullion showcased resilience by climbing over ₹2,000 for the week, translating to a gain of nearly 2%. This steady upward movement over recent days had rekindled investor optimism, suggesting a potential rebound towards the all-time high levels of ₹132,000, a peak it has been struggling to reclaim for almost a month.
Key Drivers Behind Gold's Momentum
According to Justin Khoo, Senior Market Analyst - APAC at VT Markets, the renewed momentum in gold is evident, driven by structural central bank demand and profound geopolitical anxiety.
Analysts point to the economic data releases expected after the conclusion of the historic US government shutdown as the next major trigger for bullion. The shutdown, which ended on Thursday, created a significant data vacuum, leaving both the Fed and market participants in the dark ahead of the crucial policy meeting next month.
Manav Modi, Analyst – Precious Metal – Research at Motilal Oswal Financial Services, noted that expectations of weak economic data following the shutdown are providing support to gold prices. He added that a rebound after brief profit-taking and a significant increase in Shanghai gold inventories are also contributing factors to the rise.
Providing a strong fundamental floor for demand, central banks have been massive buyers. They purchased more than 1,000 tons of gold annually in both 2022 and 2023, and have already reached the 1,000-ton threshold in 2024. Major emerging economies like China and Poland have been at the forefront of this accumulation. Early forecasts for 2025 suggest this trend will continue, with purchases expected to be in the range of 750-950 tons.
Investment Strategy in a Volatile Market
With gold prices exhibiting high volatility, analysts unanimously advise against chasing the market during peaks. Instead, they recommend using price dips as strategic opportunities to accumulate the metal.
"With gold at lifetime highs and supported by long-term de-dollarisation tendencies, investors should remain optimistic but restrained. To reduce risk, avoid chasing highs and instead accumulate during 2-3% falls," advised Justin Khoo from VT Markets.
Echoing this cautious approach, Manav Modi of Motilal Oswal also suggested that investors lock in some profits near recent highs and wait for corrections to build positions for the next anticipated upward move.
From a medium-to-long-term perspective on the domestic front, the MOSL analyst identified ₹1,18,000-1,20,000 as a strong support zone, with ₹1,30,000–1,37,000 as potential targets.
Disclaimer: This story is for educational purposes only. The views and recommendations expressed are those of individual analysts or broking firms. Investors are advised to consult with certified experts before making any investment decisions, as market conditions can change rapidly and circumstances may vary.
