Gold price outlook: Seen range-bound; traders to focus on US-Iran talks

In the current scenario, gold may continue to range trade with traders seeking more geopolitical clues before committing themselves, said Praveen Singh, head currencies and commodities at Mirae Asset

Performance:

• The ongoing gold rally is being driven by multiple crucial factors like the US Dollar movements, AI scare (Citrini Research’s AI report added to investors’ angst) as tech stocks retreat, tariff uncertainty, and geopolitical worries — especially concerning US-Iran tensions over the nuclear talks. Some support to the shiny metal is coming from the Japanese Prime Minister Takaichi nominating two reflationist academicians to the board of the Bank of Japan on February 25. On balance, geopolitical developments have been the key factor supporting a quick recovery in gold prices following the January-end slump.
• The metal, which has been up for three straight weeks and is up nearly 20 per cent year-to-date, has traded in the $5,094-$5,250 range so far this week.
• On February 26, the yellow metal closed with a gain of 0.39 per cent at $5,185.

Geopolitics watch:

• The much-awaited third round of US-Iran talks concluded without a deal in Geneva on Thursday. Intense indirect talks that were held in two sessions and lasted for around six hours, made good progress on deal front, according to Iran’s FM Araghchi, who told that technical talks with the International Atomic Energy Agency  will begin Monday in Vienna, wherein technical expert reviews will aim to resolve technical issues within a specific framework. The next round of US-Iran talks could happen as soon as next week. There were no immediate comments from the US side, though.
• Meanwhile, geopolitical tensions remain elevated as the US has amassed the largest military buildup since 2003 in the second Iraq war. US Senate Majority Leader John Thune said the goal should be regime change if the US takes military action against Iran.
• In an event that the US Secretary Rubio called ‘unusual’, Cuban border guards shot dead four people aboard a Florida-registered vessel it intercepted off its coast on Wednesday. The Cuban interior ministry alleged that the US vessel had fired first. The development is of importance in the light of the strained US-Cuba relationship and the US removing the Venezuelan President Maduro in January.

Trump's State of the Union (SOTU) Speech:

Yesterday, the US President Trump, in his 108-minute SOTU speech, the longest SOTU speech ever, highlighted his economic achievements, including GDP growth amid low inflation, and refrained from commenting on China and Greenland, though he mentioned that he will not allow Iran to have nuclear weapons. He hailed tariffs as the cornerstone of the US economy and vowed more tariffs in various sections to be rolled out later. 

Dollar Index and yields:

• The US Dollar Index closed around 0.1 per cent higher at 97.79.
• Two-year and ten-year treasury yields declined by around 1 per cent.  

ETF and COMEX inventory and delivery:

• As of February 25, total known global gold ETF holdings stood at 100.83 MOz, up by around 1.90 MOz (59 tons) YTD.
• Registered COMEX gold inventory at 17.09 MOz has slid to the lowest level since mid-Sep. 2024. Similarly, eligible COMEX gold inventory at 16.52 MOz is at its lowest since July. 
• COMEX gold delivery data showed 3,984 units delivered on Feb. 25, the largest delivery since November 28.

Data roundup:

• Weekly US job data released on February 26 were somewhat upbeat: initial jobless claims were noted to be 212,000 (forecast 216,000, prior 208,000), and continuing claims fell from 1,864,000 to 1,833,000 — lower than the forecast of 1,858,000.
• Earlier, the US ADP weekly employment change for the week ending February 7 came in at 12,750 jobs, the best since November 28. The Conference Board Confidence jumped from an upwardly revised 89 in January to 91.1 in February, the highest since December, as more Americans became optimistic about their job prospects.

Upcoming data:

• Today’s US data docket includes PPI (January).
• This week is light on data, however next week will have a deluge of crucial data like ISM manufacturing (March 2), ISM services (March 4), Feb. ADP (March 4), ISM services (March 4), retail sales (March 5) and Feb. nonfarm payroll (March 6).

Outlook:

• Gold is looking somewhat top-heavy amid encouraging US data (nonfarm payroll, ISM, ADP), however, traders will be cautious unless more clarity emerges on the nuclear deal front and the sticky point of Iran’s ballistic missiles, more so as memories of last year’s Iran-Israel war in June remain fresh. Despite the US and Iran calling for talks leading to good progress, Israel attacked Iran, and talks had to be abandoned.  Tariff uncertainty lends support to gold, but overall, the net global tariff rates presently at 10.1 per cent are well below the 13.2 per cent tariff rate pre-SCOTUS decision.  
• In the current scenario, gold may continue to range trade with traders seeking more geopolitical clues before committing themselves. Positive developments easing geopolitical worries and a strong nonfarm payroll report next week will test the bulls’ resolve as the $4,840 level will come into picture. Until then, good buying support into the dips around $5,100/$5,000 is expected. Resistance is at $5,250, a decisive breach of which may bring $5,450 into focus.

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(Disclaimer: This article is by Praveen Singh, head currencies and vommodities at Mirae Asset Sharekhan. Views expressed are his own.)