Gold prices are on track to log a fourth consecutive weekly gain, supported by easing oil prices, a softer US dollar, and persistent expectations of future rate cuts. Despite bouts of volatility, bullion has held firm near the $4,800 per ounce mark, signalling underlying strength and renewed investor interest.
Cooling Oil Prices Ease Inflation Pressure
The recent pullback in crude oil has played a crucial role in supporting gold's rally. After sharp spikes driven by geopolitical tensions, oil prices have begun to cool as markets increasingly price in the reopening of key supply routes such as the Strait of Hormuz. While infrastructure damage continues to cap the downside, fears of a prolonged supply shock have moderated.
Lower oil prices help ease headline inflation concerns, reducing the urgency for central banks to pursue aggressive monetary tightening. This improves the outlook for real yields, a key driver for gold, and encourages investors to rotate back into defensive assets like bullion.
Dollar Weakens As Diplomacy Gains Ground
The US dollar, which initially surged during the early phase of geopolitical tensions, is now losing momentum. In times of crisis, the dollar often benefits from a liquidity premium, attracting global capital flows. However, as ceasefire hopes and diplomatic efforts gather pace, that premium is beginning to fade.
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A weaker dollar typically boosts gold prices, as bullion becomes cheaper for holders of other currencies. The shift from panic-driven flows to more measured positioning has tilted the balance back in favour of gold.
Rate-Cut Expectations Still Intact
Markets are also recalibrating expectations around global growth. While inflation remains a concern, the focus is gradually shifting toward the potential slowdown in economic activity, partly triggered by the earlier energy shock.
Although rate cuts may be delayed, they are far from off the table. Lower future real interest rates enhance the appeal of non-yielding assets like gold, reinforcing its upward trajectory.
Technical Outlook: Consolidation Before Breakout?
According to Ponmudi R, COMEX gold is currently consolidating in the $4,780–$4,850 range, holding above key moving averages with a gradual improvement in momentum, though the undertone remains cautious.
He notes that a decisive break below $4,800 could trigger weakness toward $4,720–$4,700, with further downside to $4,650–$4,600. On the upside, a sustained move above $4,900 could strengthen momentum, pushing prices toward $4,970–$5,000, with a potential extension to $5,100.
Meanwhile, Kotak Securities highlighted that spot gold remains steady near $4,800 per ounce, up around 1% this week and significantly above March lows. The brokerage sees immediate resistance at $4,828.7, followed by $4,851.4 and $4,925.1.
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