Gold Price Outlook: Due to the strengthening of the US dollar and rising prices of crude oil, the fear of inflation has now started troubling people. This is the reason why there was a decline in the price of gold last week. When the war against Iran started, gold was around Rs 1,60,000. However, the price of gold on MCX has suffered a big blow last week. During this period, gold closed at Rs 1,44,825 per 10 grams, while the price of gold on COMEX closed at $ 4,574.90 per troy ounce.
Market experts say, today the price of gold is going through a complex macro environment, in which geopolitical tensions and expectations of monetary tightening are pulling in opposite directions. They say that the downward trend in gold may continue. With this, the price of gold in India can reach Rs 1,27,000 per 10 grams and $ 4,250 per ounce in the international market.
Reasons for falling price of gold
- Sugandha Sachdeva, Founder, SS WealthStreet, said the escalating conflict in Middle East—particularly the Israeli attack on Iran’s South Pars gas field and Iran’s retaliatory attacks on energy infrastructure in key Gulf states—has significantly increased global energy risks. This has led to a sharp rise in crude oil prices, raising concerns of imported inflation due to rising costs of fuel and logistics around the world. Sugandha Sachdeva further says, gold prices may remain under pressure in the near future amid strong US dollar, high bond yields, persistent inflation concerns arising from rising crude oil prices and diminishing expectations of a major cut in interest rates by the US Fed.
- If inflation does not reduce in America, then to control it, the Federal Reserve will increase interest rates so that people reduce spending. If interest rates remain high, people will reduce spending. Higher interest rates strengthen the dollar and the value of the dollar will increase as investors around the world will start investing their money in the dollar. Since gold is traded in dollars in the international markets, the strengthening of the dollar will make gold cheaper.
- If inflation does not reduce in America, then to control it, the Federal Reserve will increase interest rates so that people reduce spending. If interest rates remain high, people will reduce spending. Higher interest rates strengthen the dollar and the value of the dollar will increase as investors around the world will start investing their money in the dollar. Since gold is traded in dollars in the international markets, the strengthening of the dollar will make gold cheaper.
- SEBI-registered market expert Anuj Gupta said that despite the ongoing US-Iran war, gold rates are stable or down today. The reason for this is that the market feels that central banks around the world may face the challenge of inflation. He said that rising crude oil prices are expected to increase inflation across the world and in such a situation, central banks will have no other option but to increase interest rates or keep them stable. This was clearly visible last week when the US Federal Reserve, Bank of Japan, Bank of Canada and Bank of England indicated that they would adopt a cautious or strict stance on interest rates.
- Usually, when the price of gold crosses Rs 1.50 lakh, investors start selling gold in large quantities to make their profits, due to which the supply of gold suddenly increases in the market. In such a situation the prices start coming down.
- China and India are the largest buyers of gold in the world. If prices remain high, demand will decrease. In such a situation, there will be a direct impact on prices.
What will be the prices of gold?
Expecting the bearish pressure on the market to continue, Jatin Trivedi, VP of Research (Commodity and Currency) at LKP Securities, said, “The market environment still remains weak as key macro signals are still not favourable. Interest rates are expected to remain high, while crude oil prices remain strong due to ongoing geopolitical tensions, raising inflation concerns and limiting upside in gold prices. Overall, gold is likely to remain volatile and remain weak. Its trading range is expected to be between 1,40,000 to 1,47,000 in the near future.
Sugandha Sachdeva of SS WealthStreet said that today gold price on MCX is facing strong resistance near Rs 1,70,000 per 10 grams, while Rs 1,65,000 remains an important near-term pivot. As long as prices remain below these levels, the trend is likely to remain corrective and prices may fall to Rs 1,35,000 and Rs 1,27,000 per 10 grams.
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