Gold outlook: Range-bound trade likely; analyst suggests buying at dips
Gold outlook: Spot gold continues to trade in its short-term range of $4,700-$5,100; however, moves have become quite volatile and choppy
 "Gold outlook: Range-bound trade likely; analyst suggests buying at dips")
Performance:
- Spot gold continues to trade in its short-term range of $4,700-$5,100; however, moves have become quite volatile and choppy due to the confluence of contrasting macroeconomic and geopolitical factors at play. While a firmer US Dollar, somewhat positive macroeconomic indicators out of the US, and stabilising yields are bearish for the yellow metal, resurfacing geopolitical worries, esp. concerning Iran, support the metal.
- Daily moves in the tune of $100 in gold prices are becoming a common place in gold trading.
- On February 19, the yellow metal swung on both sides of $5,000 as traders assess macroeconomic factors and Iran-related geopolitical threats. At the time of writing this article, the shiny metal was trading with a daily gain of 0.6 per cent at $5,012. The MCX April contract at ₹155,881 was up by 0.08 per cent.
Geopolitics watch:
- Middle East tensions remain elevated as the US-Iran negotiations and tensions hog the limelight. Trump warned that Iran should make a meaningful deal in ten days, otherwise bad things would happen. An adviser to Trump has assigned a 90 per cent probability of the US striking Iran this week, though The Guardian reported that some of them have said that all the military forces deployed to the region should be in place by Mid-March.
- Iran's atomic energy chief Mohammad Eslami has asserted that no country can deprive the Islamic Republic of its right to nuclear enrichment.
- Going by betting sites, the odds of Iran's Supreme Leader Khamenei’s removal from power before September jumped by 12z5 to 48 per cent on Kalshi.
- The IEA warned that Iran’s window to reach a diplomatic agreement over its atomic activities is at risk of closing as the US builds up a massive military presence in the region.
FOMC minutes:
Minutes of the January 28 FOMC meeting revealed broad agreement to hold the key rate steady. Several members cautioned against easing policy further amid elevated inflation, though many members remained open to more rate cuts if inflation declined as they expected. The minutes showed that Inflation progress could be slower than generally forecast. Some of the members suggested a potential rate hike should inflation continue to remain elevated. Overall, the minutes tilted on the hawkish side.
Data update:
- US trade deficit widened from $53B in November to $70.30B in December as imports rose 3.6per cent month-on-month (M-o-M) Vs the estimate of 0.1 per cent, whereas exports fell 1.7 per cent Vs the forecast of 0.1 per cent. Philadelphia Fed Business Outlook Index surged from 12.6 in November to 16.3 in December (forecast 7.5). Weekly job data and ending home sales data were mixed, though.
- The recent US macroeconomic data have been mostly encouraging as the January nonfarm payroll was upbeat in terms number of jobs added, unemployment rate, earnings, and manufacturing jobs. ADP employment change in the week ending January 31 came in at 10.25K Vs the upwardly revised estimate of 7.75K jobs. November housing starts at 1,32,200 beat the estimate of 1,30,800, while December housing starts in January came in at 1,40,400 jobs (estimate 1,30,400). Industrial production (January) rose 0.7 per cent (forecast of 0.4 per cent), fastest pace since February 2025.
US Dollar index and yields:
At the time of writing, the US Dollar Index, buoyed by the US data and hawkish FOMC minutes, was trading with a gain of 0.2 per cent at 97.88. Ten-year yields were flattish around 4.09 per cent, while two-year at 3.47 per cent was up one bps.
US Supreme Court decision on tariffs:
The US Supreme Court (SCOTUS) may strike down US President Trump’s tariffs as soon as this week. It is to be noted that Lower courts have already ruled that he exceeded his authority by invoking the 1977 International Emergency Economic Powers Act (IEEPA) in implementing his sweeping “reciprocal” duties. If the SCOTUS rules that IEEPA can’t be used to impose tariffs, there are alternative ways, like replacing its tariffs with licenses.
ETF holdings, COMEX inventory, and delivery:
- As of February 18, total known global gold ETF holdings stood at 100.10 MOz, up nearly 1.15 MOz YTD.
- Registered COMEX gold inventory at 17.23 MOz is at the lowest level since January 2025 and is down nearly 29% from the record peak of 24.25 MOz seen on April 7, 2025.
- COMEX gold delivery totalled 2476 units in the week ended February 13.
Upcoming data:
Major US data on deck include real personal spending, Q4 advance gross domestic product (GDP), University of Michigan Consumer sentiment, and S&P global US PMIs (Feb. 20), Conference Board Consumer Confidence (Feb. 24). Eurozone's PMIs, Germany’s 4Q final GDP and Japan's national CPI (Feb. 20) will also be in focus.
Outlook:
- Gold traders are primarily focusing on escalating US-Iran tensions as destabilisation of the Middle East would have huge repercussions for global geopolitics. Domestic gold prices can get additional support on weakening INR. Weekend geopolitical risk would keep the metal bid. On the other hand, a firmer US Dollar, now up nearly 3 per cent from its four-year low of 95.55 reached on January 27, and positive US data exert downside pressure.
- The yellow metal is expected to continue to range trade in the near term. The metal would gain upward traction above $5,130 to test the next major resistance at $5,200, which may come on further escalation of US-Iran tensions. Support is at $4,850 followed by $4,660. As long as Iran tensions linger, it is advisable to buy the dips with a tight stop-loss.