Gold Prices Likely to Stay Under Pressure Amid Strong US Dollar and Fed Policy Outlook: Analysts

Gold prices are likely to remain under pressure over the next month amid global macroeconomic factors, while volatility is expected to persist as investors closely monitor the US Federal Reserve's policy trajectory, inflation trends, the US dollar and geopolitical developments, according to market analysts.

"Spot gold has managed to recover from its recent seven-month low after a sharp fall earlier this week, but the overall trend remains weak. Recent US inflation data largely matched expectations and provided some temporary support as US bond yields eased," Riteshkumar Sahu, Senior Manager-Commodities Research at Kotak Neo, told ANI on Friday.

He further added that renewed strength in the US dollar, strong US jobs data and expectations that the Federal Reserve could still raise interest rates later this year continue to keep pressure on gold.

Spot gold (XAU/USD) was trading around $4,022 per ounce.

Sahu said immediate support is placed at $3,950 per ounce, while resistance is seen at $4,200 per ounce. A break below support could drag prices towards the $3,800-3,400 range, whereas a sustained move above resistance could push prices towards the $4,600-4,800 range.

What Are the Current MCX Gold Price Levels and Key Support-Resistance Zones?

On the domestic front, MCX Gold was trading around Rs 1,43,127 per 10 grams, with immediate support at Rs 1,37,500 and resistance at Rs 1,45,500.

According to Sahu, a break below support could take prices towards Rs 1,34,000-1,25,500, while a move above resistance could lift prices towards Rs 1,52,000-1,60,500.

Sahu said continued outflows from gold-backed exchange-traded funds (ETFs), although at a slower pace than in previous weeks, indicate investor interest has improved marginally but remains below last year's levels.

He noted that spot gold has declined by more than 3.5 per cent this week and nearly 12 per cent this month, putting prices on track for a fourth consecutive weekly and monthly decline.

From a technical perspective, Sahu said spot gold has held above the key chart support near $3,960 per ounce and formed an inside-candle pattern, indicating the market is awaiting fresh directional triggers.

A move above $4,045 per ounce could trigger a short-term recovery towards the 20-day moving average near $4,200, while $3,960 remains the key technical support level.

He added that comments from Federal Reserve officials and US consumer sentiment data will be closely watched for the next directional move in gold prices.

Ravindra Kumar, Senior Research Analyst at SMC Global Securities, said easing geopolitical tensions following progress in the US-Iran peace process have reduced safe-haven demand for gold, while the sharp decline in crude oil prices could help cool inflationary pressures and eventually allow the Federal Reserve to adopt a relatively softer policy stance if inflation continues to moderate.

(With inputs from ANI)