Gold outlook: Analyst holds mildly bearish stance; $5k make-or-break level
Gold price outlook: Gold is caught between safe haven demand support and selling coming on a firmer US Dollar
 "Gold outlook: Analyst holds mildly bearish stance; $5k make-or-break level")
Gold price outlook: Under pressure as US Dollar strengthens
Spot gold traded with a bearish tilt on February 5 as the metal, after rising in the Asian and European sessions, came under pressure in the US session on a firmer US Dollar. The yellow metal, at the time of writing this article, was changing hands at $5,083, down nearly 1.1 per cent for the day. The MCX April contract at ₹1,59,801 was down 1 per cent.
Earlier, spot gold prices posted fourth straight weekly rise in the week ending February 27 as traders focused primarily on geopolitical risks especially concerning the US-Iran tensions over nuclear deals; rate cut hopes also supported the metal. The yellow metal surged over 3 per cent in the week to close at $5,278 -- its highest ever weekly close.
Geopolitics watch:
The Iran war continued unabated for the sixth day on February 5 as Iran fired missiles across gulf countries.
Iran’s Islamic Revolutionary Guard Corps said retaliatory attacks will intensify in coming days as US President Donald Trump maintains that the US is doing very well on the war front.
Azerbaijan became the latest country to be caught in Iran’s attacks as it was hit by Iranian drones; so far nearly one dozen countries have been embroiled in the ongoing war.
Duration of the war is uncertain in the prevailing scenario.
Trade and tariff:
The US Secretary Bessent said on March 4 that the global US tariffs could be hiked from 10 per cent to 15 per cent as soon as this week. This increase in tariffs will push effective US tariff rates from just above 10 per cent to just above 12 per cent, it will be below the pre-SCOTUS ruling tariff rate of 13.2 per cent though.
Operation EPIC Fury objectives:
Although the objectives of US-Israel attack on Iran in the ongoing ‘Operation Epic Fury’ remain muddled, the Pentagon has listed four key objectives: 1- demilitarization of Iran 2- Elimination of the hostile clerical regime 3- Protection of the US from current and future threats 4- No nuclear weapons for Iran.
The US Senate rejects bid to rein in Iran war:
The Senate has rejected the attempt to rein in the war in Iran in a 47-53 voting.
Data roundup:
Weekly job data released on March 5 were mixed.
The recent US data have been largely encouraging. ADP employment change at 63K in February beat the estimate of 50K, thus further dispelling some of the job concerns, though prior data was revised lower from 22K to 11K. ISM services Index soared to 56.10 in February -- expanded at the fastest clip since July 2022 (estimate 53.50, prior 53.80). New orders and employment beat the expectations. S&P Global US manufacturing PMI (Feb. final reading) came in at 51.6 (forecast 51.4, prior 51.2). ISM manufacturing surged to 52.4 in February Vs the estimate of 51.5 and prior reading of 52.60. It is the quickest pace since August 2022.
US Dollar Index and yields:
The US energy independence and rising risks to the emerging markets due to the ongoing Iran war are leading to safe haven inflows into the US, which is supporting the US Dollar.
At the time of writing this article, the US Dollar Index was trading with a gain of around 0.5 per cent at 99.21.
The US yields harden: Both 2-year yields and ten-year yields were up around 1 per cent for the day at 3.59 per cent and 4.14 per cent.
IMF Warning:
On Tuesday, the International Monetary Fund warned the war could worsen the global economic outlook if drawn-out fighting causes energy prices to spike.
ETF and COMEX inventory:
As of March 4, total known global gold ETF holdings stood at 100.13 MOz as holdings fell for the third straight day, though overall, the ETFs have recorded a net inflow of around 1.18 MOz YTD.
Registered COMEX gold inventory at 17 MOz has fallen to the lowest level since December 2024 and is down by around 30 per cent since the record peak of 24.25 MOz seen in April 2025.
Upcoming data:
Major US data on tap in near term include crucial nonfarm payroll report (March 6), retail sales (March 6), February CPI (March 11), January PCE Price Index (March 13), final Q4 GDP (March 13), University of Michigan sentiment and JOLTs job openings (March 13).
China's February CPI and PPI data due on March 9 will also be in focus.
Outlook:
Gold is caught between safe haven demand support and selling coming on a firmer US Dollar.
A robust US nonfarm payroll report can intensify the sell-off, which can send gold lower to test the key support at $5,000. A decisive breach of this support will open the way to test the next major support at $4,840.
On the flip side, a weak job report can alleviate the selling pressure and gold rise to test the crucial resistance around $5,225. Major resistance is at $5,450.
We hold a mildly bearish stance on the metal in the short term unless the Iran war spreads significantly.
Swings in USD-INR are expected. The USD-INR, after RBI’s intervention on March 5, can strengthen again, which will support domestic gold prices. ================================
(Disclaimer: This article is by Praveen Singh, head currencies and vommodities at Mirae Asset Sharekhan. Views expressed are his own.)