Gold prices are firming up, but are likely to see resistance as they rise, says Manav Modi, Senior Analyst, Commodity Research at Motilal Oswal Financial Services Ltd. Gold continues to trade in a broad range with some reversal towards the end of last week. Despite a reversal, prices remain below the 20-day moving average near ₹155,100, indicating that the broader trend is still under pressure and that the recent recovery is yet to confirm a meaningful reversal. The bounce from the lower Bollinger Band around ₹148,300 has provided temporary support, but sustained buying interest is required for momentum to improve further.
Key Levels to Watch
On the upside, ₹155,000–156,000 remains the immediate resistance zone, followed by a stronger hurdle near ₹160,000–162,000, which coincides with the upper Bollinger Band. A decisive close above ₹156,000 could improve sentiment and open the door for a move towards ₹160,000 and higher levels. However, failure to reclaim this zone may attract fresh selling pressure. On the downside, ₹150,000 remains a crucial support level, with the lower Bollinger Band near ₹148,300 acting as the next major support. A breakdown below ₹148,000 could accelerate bearish momentum and expose ₹145,000–142,000 levels. Overall, the broader structure remains cautious, with prices attempting to stabilize after a prolonged correction.
Market Drivers
Gold prices witnessed a highly volatile week, ultimately gaining support from easing geopolitical tensions and softer inflation expectations. Early in the week, bullion rallied sharply after US and Iranian officials announced an interim peace framework aimed at ending hostilities, lifting the US blockade on Iran, and reopening the Strait of Hormuz. The prospect of increased oil supplies triggered a sharp decline in crude prices, reducing concerns over energy-driven inflation and improving sentiment across precious metals markets.
Economic data released during the week added to market volatility. US CPI and PPI readings came in broadly softer than expected, indicating that inflationary pressures may be moderating despite elevated energy prices in recent months. The data initially boosted expectations that the Federal Reserve could adopt a less aggressive policy stance, leading to declines in Treasury yields and the US dollar, both of which supported gold prices.
However, gains were partially capped after the US non-farm payrolls report surprised on the upside. The US economy added 172,000 jobs in May, significantly above market expectations, while the unemployment rate remained steady at 4.3%. The stronger labor market data reinforced the view that the Federal Reserve may keep interest rates higher for longer, limiting downside risks to inflation and preventing a stronger rally in bullion. It is also important to note that both US CPI and PPI were reported higher, signalling the pressure of higher oil prices. However, if war is eased off, we could see some ease off in price indexes as well. Overall, gold traded in a wide range throughout the week as markets balanced geopolitical developments, inflation data, and labor market strength. Expectations for further Fed tightening moderated, with markets now pricing around a 49% probability of a rate hike by December compared with nearly 70% a week earlier. Focus this week will be on the Federal Reserve policy meeting, updated economic projections, and policy decisions from the Bank of Japan and Bank of England.
(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.)
