Gold rate outlook: Yellow metal prices set for third week in a row. Opportunity to buy?

Gold prices on the Multi Commodity Exchange (MCX) saw a significant increase on Friday, March 20, with the April contract climbing by ₹1,914, or 1.32%, reaching ₹1,46,868 per 10 grams.

The uptick in domestic prices was primarily influenced by a rise in market sentiment, following a reduction in geopolitical tensions in West Asia, especially after hints that the US might ease sanctions on Iranian oil, which could enhance global supply and lower risk premiums.

Analysts mentioned that diminished concerns about potential disruptions to critical energy infrastructure in the Middle East have decreased safe-haven demand, facilitating a technical recovery in prices.

In the global market, gold prices increased slightly on Friday but were still on course for a third straight weekly decrease. Spot gold increased by 0.6% to $4,675.23 per ounce, while US gold futures set for April delivery rose 1.6% to $4,676.90.

Despite this, bullion has fallen over 6% this week, marking a third consecutive week of declines and a drop of more than 10% since the intensification of the US-Israel-Iran conflict in late February.

Why has gold prices fallen?

The appreciating US dollar, rising more than 2% this month, has become an important safe-haven asset, restraining increases in gold prices. Furthermore, the Federal Reserve's careful perspective on inflation and interest rates has reduced expectations for imminent rate cuts, putting additional pressure on prices.

Demand trends in physical markets also mirrored this subdued sentiment, as gold discounts in India decreased somewhat owing to festive purchases, while premiums in China fell in response to lower consumption.

Mohit Gulati, CIO and managing partner of ITI Growth Opportunities Fund, believes that the current selloff in gold is being misread by the market. Gold is down nearly 8% this week; its worst weekly performance since March 2020, not because the bull case has broken down, but because a leveraged paper market is flushing positions in a rising rate, rising oil environment.

Gulati said that when Iran war-driven energy costs reignite inflation fears and keep the Fed hawkish, paper gold gets hit first. That’s mechanics, not fundamentals.

“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,” added Mohit Gulati.

Gold prices Outlook

According to Jigar Trivedi, Senior Research Analyst - Currencies & Commodities, IndusInd Securities Ltd, markets have now pushed back expectations for Fed rate cuts to 2027 and are pricing in two rate hikes each from the ECB and BOE this year, further weighing on gold’s appeal.

MCX Gold dropped by more than 6% in the week gone by and breached Rs. 150,000/10g psychological support. Next week is truncated week due to Ram Navami festival however.

"Comex Gold has support near $4,500 - 4,400/oz on the flip side, $4,700 is resistance.

MCX Gold April has a strong floor near Rs. 142,000/10g on higher side Rs. 1,47,000/10g is resistance. we recommend shorting on every bounce," said Trivedi.

What should be your strategy next week?

Mohit Gulati noted that gold went from $2,600 to over $5,500 in twelve months, and a correction to $4,600 simply means the trade got crowded.

“I remain a perpetual bull on gold. Every dip in this environment is a gift. I would be accumulating, not panicking. 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,” added Gulati.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.