Gold Market Outlook: Prices Expected to Remain Steady Next Week Amid Risks
Gold prices are projected to maintain their strength in the coming week, bolstered by increased global risk aversion and a persistent decline in the US dollar index. Analysts indicate that various trade-related developments will also play a crucial role in shaping market dynamics. Investors are keenly awaiting key US economic data, including Consumer Price Inflation (CPI) and retail sales figures, which may provide further insights into bullion price trends.
Market Dynamics and Influencing Factors
Analysts believe that gold will remain robust as long as it stays above Rs 97,000 per 10 grams on the Multi Commodity Exchange (MCX). Jateen Trivedi, Vice President and research analyst at LKP Securities, highlighted that renewed trade tariff concerns and the ongoing weakness of the dollar index are driving global risk aversion. This shift is prompting investors to move away from riskier assets and gravitate towards safe-haven investments like gold. Additionally, a weak rupee could further bolster the price of the yellow metal, making it more appealing to investors.
Last week, gold futures for August delivery saw an increase of Rs 842, or 0.86%, on the MCX. The market initially opened on a weaker note due to easing tensions between Israel and Iran and stronger-than-expected US non-farm payroll data, which dampened demand for safe-haven assets. However, the market rebounded sharply after US President Donald Trump announced new tariffs ranging from 35% to 50% on imports from Canada and Brazil, reigniting fears of a trade war and subsequently boosting demand for gold.
Recent Price Trends and Projections
Gold prices have surged nearly 3% on the MCX, climbing from Rs 94,951 per 10 grams on June 27 to Rs 97,830 on July 11. Prathamesh Mallya, DVP of Research for Non-Agri Commodities and Currencies at Angel One, attributed this increase to the Trump administration’s aggressive tariff policies affecting commodities such as copper, aluminum, and pharmaceuticals. The uncertainty surrounding the upcoming August 1 tariff deadline has further contributed to market volatility.
Internationally, Comex gold futures have also experienced a significant rise of approximately 2.8% during the same period. Mallya forecasts that gold could potentially reach $3,500 per ounce and Rs 1,00,000 per 10 grams on the MCX in the near future, especially as geopolitical tensions and trade uncertainties continue to influence market sentiment.
Geopolitical Tensions and Their Impact
N S Ramaswamy, head of commodities and CRM at Ventura, noted that gold’s key resistance level of $3,360 has been tested, and a decisive break above this could lead to further gains. Despite the US dollar showing signs of recovery, geopolitical tensions, including potential sanctions on Russia and the threat of additional tariffs, are likely to sustain gold’s appeal as a safe-haven asset.
As traders closely monitor ongoing negotiations between India and the US regarding a potential trade deal, market sentiment remains cautious. The interplay of these factors will be crucial in determining the future trajectory of gold prices. With investors on high alert for any developments, the gold market is poised for continued fluctuations in the coming weeks.
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