Gold and silver prices are expected to trade in a range this week, according to Vedika Narvekar, Research Analyst - Commodities & Currencies at Anand Rathi Shares and Stock Brokers. The precious metals have paused their recent upward momentum, with international spot gold declining around 2.5% last week to approximately $4,712 per ounce, while domestic MCX gold prices fell about 1.24% to Rs 1,52,699 per 10 grams. This has brought gold's year-to-date gains down to 9%, indicating a cooling after the strong rally earlier this year.
Key Factors Weighing on Gold
One of the primary factors pressuring gold has been the rise in crude oil prices due to the ongoing Strait of Hormuz disruption, which has revived global inflation concerns and pushed bond yields higher. Simultaneously, record-high US equity markets have reduced gold's appeal as a safe-haven asset. This shift in sentiment is evident in investor positioning, with US investors trimming their gold ETF holdings and reducing net long positions in futures.
Focus for This Week
Gold and silver entered the week on a slightly bearish tone, with direction likely driven more by overall risk sentiment than traditional safe-haven demand. A notable trend has been the positive correlation with US equities. Strong earnings from major companies like Microsoft, Alphabet, Meta, and Amazon could support precious metals if market volatility remains low. Conversely, any disappointment in earnings, a spike in bond yields, or a further rise in crude oil prices could pressure gold.
On the macro front, major central banks including the Federal Reserve, Bank of Japan, Bank of England, and European Central Bank are widely expected to keep interest rates unchanged this week. As a result, market focus will shift to forward guidance, particularly commentary around inflation risks stemming from geopolitical tensions such as the US-Iran situation.
Additionally, key data points including US Q1 GDP and the March PCE inflation data will be closely watched for further cues on the interest rate outlook and economic health. Another important event this week is the release of the Q1 Gold Demand Trends report by the World Gold Council, which will provide insights into global demand and supply dynamics.
Technical Levels and Near-Term Outlook
Gold (Spot) CMP: $4,560
Support: $4,400 / $4,300
Resistance: $4,750 / $4,850
MCX Gold CMP: Rs 148,825
Support: Rs 1,43,000 / Rs 1,40,000
Resistance: Rs 1,54,500 / Rs 1,58,000
Overall, gold is expected to trade in a range with a slight downside bias in the early part of the week, potentially testing the $4,400 level, which corresponds to around Rs 1,43,000 on MCX. Volatility is likely to increase as markets react to central bank commentary and key US economic data. Any signs of weaker growth, particularly from GDP data, could provide support to gold prices later in the week, while upside is likely to remain capped near $4,750 in spot and Rs 1,54,500 levels on the MCX. It is to be noted that the broader long-term trend for gold remains positive, and the current phase is seen as a healthy consolidation rather than a reversal.
Silver Outlook
International spot silver is currently trading around $73 levels and may find initial support around $71, with strong support near $68 this week. Resistance for silver is around $76/$80. On the MCX, silver is trading around Rs 2,36,500 and may find support at Rs 2,29,500 / Rs 2,22,000, while resistance is seen at Rs 2,45,000 / Rs 2,58,000.
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.
