Gold Prices Surge Amid Easing Tensions in West Asia
Gold Prices Rise on MCX
On March 20, gold prices experienced a notable increase on the Multi Commodity Exchange (MCX). The April contract saw a rise of Rs 1,914, equating to a 1.32% increase, closing at Rs 1,46,868 per 10 grams. Analysts attribute this uptick to a more positive market sentiment following signs of reduced tensions in West Asia. Additionally, speculation surrounding a potential easing of US sanctions on Iranian oil has bolstered expectations for increased global supply and diminished risk premiums.
Internationally, gold prices showed slight gains but are still on track for a third consecutive weekly decline. Spot gold increased by 0.6% to $4,675.23 per ounce, while US gold futures for April delivery rose by 1.6% to $4,676.90. Despite these daily gains, bullion has dropped over 6% in the past week and more than 10% since the escalation of the US-Israel-Iran conflict in late February. Analysts point out that a stronger US dollar, which has risen over 2% this month, has limited gains, alongside the Federal Reserve's cautious stance on inflation and interest rates.
Understanding the Market Dynamics
Mohit Gulati, Chief Investment Officer and managing partner of ITI Growth Opportunities Fund, explained that the current selloff is primarily driven by market mechanics rather than a fundamental breakdown of gold. He stated, “The structural story hasn’t changed. De-dollarisation is real. Central bank demand is real. Trump’s fiscal recklessness is real. The geopolitical unpredictability is real. These aren’t short-term catalysts — they are multi-year structural tailwinds.”
Gulati noted that the unwinding of leveraged positions in paper gold is occurring due to rising rates and energy costs, but he believes that every dip in prices presents a buying opportunity.
Future Outlook for Gold Prices
Jigar Trivedi, a Senior Research Analyst at IndusInd Securities, highlighted in a report that global markets have shifted expectations for Federal Reserve rate cuts to 2027, while also factoring in potential rate hikes from the European Central Bank and the Bank of England. On the MCX, gold has surpassed the psychological threshold of Rs 1,50,000 per 10 grams, with support around Rs 1,42,000 and resistance near Rs 1,47,000. Trivedi suggests shorting on rallies.
Conversely, Gulati maintains a bullish outlook on gold for the long term, stating, “I remain a perpetual bull on gold. Every dip in this environment is a gift. The $4,500–$4,700 zone looks like a compelling entry for anyone who missed the rally. The next leg higher is a matter of when, not if, and Trump and this geopolitical landscape aren’t going anywhere anytime soon.”