US-Iran war: Safe haven asset gold has remained volatile since the beginning of the US-Iran war. Despite continued geopolitical tensions, gold prices have declined by nearly 7% since February 28, indicating a shift in investor preference toward the US dollar as the primary safe-haven asset.
Gold prices rose around 2.2% over the week, though gains were limited as crude oil jumped more than 10%, heightening inflation worries and disrupting the usual safe-haven appeal, according to Sugandha Sachdeva, Founder of SS WealthStreet.
COMEX gold settled at $4,679.70 per ounce, while MCX gold closed at ₹1,49,650 per 10 grams for the week.
Why are gold prices falling?
Sachdeva further explained that the geopolitical developments remain uncertain as early indications from Donald Trump and Iran pointed toward a possible ceasefire, but the tone has since shifted, with stronger rhetoric and fresh threats of extended military action.
Meanwhile, Iran’s IRGC Navy continues its blockade of the Strait of Hormuz, keeping oil prices elevated, fuelling concerns around imported inflation, and strengthening expectations of a tighter monetary policy stance in the US.
From a macro standpoint, the US economy showed resilience in March, with labour market data exceeding expectations. Non-farm payrolls rose by 178K against estimates of 65K, the unemployment rate came in lower at 4.3% versus the 4.4% forecast, and wage growth remained steady. These factors reinforce the likelihood of the Federal Reserve maintaining a hawkish stance, which supports the dollar and caps gains in bullion. Meanwhile, continued ETF outflows during March, with redemptions far outpacing inflows, signal weakening investor demand for gold, Sachdeva opined.
Gold prices likely to remain volatile
Sachdeva believes that as long as oil prices remain elevated and rate-cut expectations stay delayed, bullion is likely to witness sharp, headline-driven volatility rather than a sustained directional rally.
“In essence, gold remains caught between geopolitical uncertainty and macro headwinds, with price action increasingly dictated by crude oil trends and dollar strength,” she added.
Meanwhile, Ponmudi R, CEO of Enrich Money, said that overall sentiment remains cautiously optimistic, with commodities slowly transitioning from consolidation to a recovery phase. However, the lack of strong follow-through buying across global markets clearly indicates a wait-and-watch approach.
“Investors are pricing in uncertainty, but not committing to a clear trend. Near-term direction will remain event-driven, influenced by currency movement, central bank signals, and evolving geopolitical developments, particularly in the Middle East and global growth outlook,” Ponmudi added.
Technical outlook of the gold prices
On the technical outlook of COMEX gold, Ponmudi said that the prices are holding above key short-term moving averages while continuing to face resistance in the $4,700–$4,750 zone. Price action indicates underlying weakness, with geopolitical support failing to generate strong upside momentum.
“A decisive breakout above $4,800 can push prices toward $4,850, with further upside extending to $4,900, where strong supply is expected. On the downside, a sustained break below $4,600 may accelerate selling toward $4,550–$4,500, with extended weakness dragging prices toward $4,400. The overall structure remains fragile, with downside risks dominating unless key resistance levels are reclaimed,” he added.
Meanwhile, Sachdeva said on the MCX gold prices that it continues to consolidate, where it faces a strong resistance zone at ₹1,57,600- ₹1,58,800 per 10gm at the domestic bourses and $4,800–$4,880 per ounce in the international markets.
“Unless these levels are decisively breached, the upside remains constrained. On the downside, immediate support is seen at $4,400 and ₹1,44,000- ₹1,45,000 per 10gm, with a breach potentially triggering further corrective pressure,” said Sachdeva.
Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified experts before making any investment decisions.
