Gold prices are likely to see a limited upside because of high inflation in the US, according to Manav Modi, Senior Analyst, Commodity Research at Motilal Oswal Financial Services Ltd, as reported by Business-Today. The metal inched higher in the previous week, reversing from recent lows of around $4,000 after a weaker US dollar and softer-than-expected US labour market data reduced expectations of an immediate Federal Reserve interest rate hike. The weaker nonfarm payrolls and unemployment figures reinforced the view that the US economy is gradually cooling, easing pressure on the Fed to tighten monetary policy further and improving sentiment towards non-yielding assets such as gold.
Fundamental Drivers
However, upside in bullion may remain limited as inflation continues to stay above the Federal Reserve’s 2% target, prompting policymakers to maintain a cautious stance on future rate cuts, Modi added. Investors will closely scrutinise the minutes of the Federal Reserve’s June meeting for fresh insights into officials’ assessment of inflation, labour market conditions and the path of monetary policy. Market participants will also monitor US inflation expectations and speeches from several Federal Reserve officials for further clues on the timing of policy easing.
While lower crude oil prices have helped reduce concerns over energy-driven inflation, broader price pressures from strong AI-related investment, supply chain constraints and adverse weather disruptions remain in focus. At the same time, ongoing geopolitical uncertainties continue to provide an underlying safe-haven bid for gold, although the metal’s direction will largely depend on movements in the US dollar and Treasury yields. Trading activity could also remain volatile this week as markets adjust to liquidity conditions following Friday’s US Independence Day holiday.
Technical Levels and Chart Patterns
Gold opened this week on a steady note and continues to trade in a lower-high, lower-low structure on the daily chart. The metal is currently attempting a rebound from the lower Bollinger Band, but the broader bias remains sideways to lower unless it can reclaim the 20-day moving average and break above key resistance.
The 20-day Bollinger Bands are placed at: upper band 154,868, middle band (20 SMA) 147,463, and lower band 140,059. Gold is trading slightly above the middle band, indicating a tug of war between buyers and sellers. A decisive close above 147,500 - 148,000 could open the door for a move toward the upper band, while a break below 145,000 may see prices slip back toward the lower band.
On the Fibonacci retracement tool, drawn from the recent major swing low near 120,000 to the high near 179,000, the key retracements are as follows:
| Level | Price (INR per 10 grams on MCX) |
|---|---|
| 23.6% | 151,800 |
| 38.2% | 144,650 |
| 50.0% | 138,500 |
| 61.8% | 132,300 |
The price is currently trading between the 23.6% and 38.2% levels, making this a crucial decision zone for the week. Holding above 144,650 will keep the near-term structure constructive, whereas a break below it could extend the correction toward the 50% retracement.
From a chart pattern perspective, gold appears to be forming a broadening range, a pattern that reflects rising volatility and indecision. A breakout above 151,800 could trigger a fresh leg higher, while a breakdown below 144,000 - 143,500 would favor the bears and increase downside momentum.
Outlook for the Week
Overall, gold remains range-bound with a negative tilt below 147,500. A sustained move above 151,800 could revive bullish momentum toward 155,000 - 158,000, while a break below 144,650 may drag prices to 140,000 and then 138,500. Traders should watch US bond yields, the dollar index, and key macro data for directional cues during the week. The key upcoming data release this week is the Federal Reserve’s June meeting minutes, which will be parsed for any hints on the timing of rate cuts.
(Disclaimer: Recommendations and views on the stock market, or any other asset classes or personal finance management tips given by experts and analysts are their own. These opinions do not represent the views of The Times of India.)
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