Gold braces for volatile week as Middle East tensions escalate: Analysts

After witnessing sharp swings last week, gold prices are expected to remain volatile in the coming days as investors track escalating tensions in the Middle East and key global economic data releases, analysts said on Sunday.

Market participants are likely to track developments in the conflict involving Israel and Iran, as any escalation could support safe-haven demand for bullion, while signs of easing tensions may trigger sharp profit booking in the market.

“Focus will again be on developments in the Middle East. Any further escalation could be positive for gold prices, but signs of de-escalation may lead to sharp selling,” Pranav Mer, vice president, Commodity and Currency Research at JM Financial Services, told the news agency PTI.




Silver is also witnessing heightened volatility, though it is currently in a consolidation phase, analysts noted.

“Silver is trading with high volatility but remains capped due to consolidative movements in gold and industrial metals such as copper and zinc,” Mer added.

In the domestic market, bullion futures saw sharp swings during the past week. On the Multi Commodity Exchange (MCX), silver plunged by Rs 14,359, or 5.08 per cent, while gold slipped Rs 470, or 0.3 per cent.

According to Prathamesh Mallya, deputy vice president, Research (Non-Agri Commodities and Currencies) at Angel One, gold traded within a broad range of Rs 1.59 lakh to Rs 1.70 lakh per 10 grams last week.

Geopolitical tensions, strong demand from Asian markets, continued purchases by central banks, elevated US Treasury yields and a firm US dollar are among the key factors currently shaping bullion prices, he said.

Globally, silver futures on Comex dropped by USD 8.98, nearly 10 per cent, during the week, while gold prices declined by USD 89.2, or 1.7 per cent.

Analysts noted that gold ended the week in negative territory as investors shifted towards alternative safe-haven assets such as the US dollar, Swiss franc and government bonds, even as ongoing geopolitical tensions helped limit deeper losses.

Investors will also monitor key economic indicators in the coming week, including inflation and trade data from China, inflation readings from the US, Germany and India, as well as US consumer sentiment and the Personal Consumption Expenditures (PCE) price index, which could influence global growth expectations and monetary policy outlook.