Gold Price Outlook: Short-Term Bounce Amid Declining Demand for Safe-Haven Assets
Delhi, India — The gold market is experiencing fluctuations with current prices reflecting a notable downturn. On Friday, May 16, 2025, gold futures on India’s Multi Commodity Exchange (MCX) closed at ₹92,480 per 10 grams, marking a 0.74% decrease or a loss of ₹689 from the previous close of ₹93,169. The recent decline in gold prices is linked to decreased investor demand for this traditional safe-haven asset, especially following positive geopolitical developments that are fostering a more optimistic market sentiment.
Falling Prices Amid Easing Tensions
The decrease in gold prices is correlated with the recent trade agreement between the United States and China, which has fueled optimism in equity markets. Following years of tariff disputes initiated in April 2025 by former President Donald Trump, indications of a de-escalation in trade tensions have shifted investor focus away from gold and into riskier assets, such as stocks. As a result, the demand for gold, typically sought after during times of market uncertainty, has significantly waned.
Jigar Trivedi, Senior Research Analyst at Reliance Securities, noted that other geopolitical factors, such as a temporary truce between India and Pakistan, are also contributing to improved global sentiment. He emphasized that these developments have played a crucial role in reducing anxiety among investors, further diminishing the allure of gold as a safe-haven asset.
Notably, gold futures have witnessed a significant decline, losing over 3.5% or more than ₹3,000 per 10 grams in a short duration. As the markets closed last week, gold traded near the ₹92,000 mark.
Macroeconomic Factors Play a Role
Macroeconomic indicators are also influencing the gold market. Softer-than-expected inflation data from the United States has strengthened expectations that the Federal Reserve may implement interest rate cuts later this year. Such measures, while aimed at easing financial pressure in the economy, can diminish gold’s appeal as a non-yielding asset, leading to further declines in its price.
Fed Chair Jerome Powell has cautioned that challenges could arise from supply-side shocks, making inflation more volatile and challenging to manage, thereby impacting market strategies.
Future Outlook: Bearish Sentiments Predicted
Analysts are currently taking a bearish stance on gold prices for the upcoming week. While some believe a short-term bounce is possible amid the prevailing downward pressure, experts suggest exercising caution regarding new investments in gold. According to market analysts, the technical indicators suggest that gold’s prices are likely to maintain a bearish outlook unless there is a solid closing above ₹92,000 per 10 grams.
Market watchers anticipate that the next key support level is around ₹90,000. Given the current market conditions, experts recommend a "sell-on-rise" strategy for traders, indicating that investments should be approached with caution and that it may be prudent for investors to wait for further confirmation before making any significant moves.
The uncertainty surrounding geopolitical developments in Russia and Ukraine also persists, adding another layer of complexity to the market outlook for gold.
As always, investors are encouraged to conduct thorough research or consult with certified experts before making any investment decisions in the commodity market.
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