Sell Gold with tight stop-loss as bears eye $4,400 support: Analyst

Performance:

• On March 19, spot gold traded between $4,500 and $4,870. The metal crashed as much as 7 per cent as rising energy prices due to the war in West Asia are making central banks exercise utmost caution on the inflation front.
• There was not much support for markets from the Federal Open Market Committee’s (FOMC's) monetary policy decision delivered on March 18, either. The Fed, notwithstanding a very weak February job report, stuck to its balancing act in assessing the economic situation in the wake of the raging Iran war and leaned slightly hawkish in its verdict and outlook for rates.
• Other key central banks also showed concerns and vigilance on rising energy prices.
• February US PPI data coming out to be hot is also intensifying the selling pressure on commodities.
• At the time of writing this article, the yellow metal was changing hands at $4,582, down nearly 5 per cent for the day.

Energy turmoil:

 

• The price of oil and natural gas jumped due to escalating attacks in the Persian Gulf, causing long-term damage to major energy facilities. An Iranian missile strike on the Ras Laffan complex -- the world’s largest liquefied natural gas plant-- in Qatar on March 18 caused extensive damage. Reuters quoted QatarEnergy Chief Executive Officer Saad al-Kaabi, who said two facilities that produce 17 per cent of the country’s LNG exports, or about 13 million tons a year, were affected, and it will take three to five years to repair them.
• Oil loadings on Saudi Arabia’s west coast were briefly affected by an attack. Similarly, a gas facility in Abu Dhabi was shut following damage due to the ongoing war.
• US Treasury Secretary Bessent said that the Us may remove sanctions from Iranian crude oil, which is already in tankers on the water.
• Iran has threatened that some gulf energy sites are now direct and legitimate targets.

READ | Silver may retest $64 support; break could trigger fall to $59-$60: Analyst 

Central bank watch:

• As expected, the US Federal Reserve, in its monetary policy decision taken on March 18, kept the benchmark rate unchanged at 3.50-3.75 per cent. The bank revised inflation, growth, and neutral rate forecasts higher as AI-led productivity is expected to support economic growth. As per the FOMC, the impact of the Iran war on the US economy are uncertain. In his post-FOMC presser, the Fed Chair Powell said that the US growth is solid and there will be no rate cut unless inflation comes down. He added that some FOMC members talked about the next move possibly being a hike though the vast majority of participants don’t see that as their base case.
• As anticipated, the ECB kept the benchmark interest rate unchanged at 2 per cent for a sixth straight meeting. The Central Bank said that its severe scenario projection sees inflation peaking above 6 per cent in Q1 2027. President Lagarde said in her presser that inflation risks are skewed to the upside.
• The Bank of England, in line with the expectations, kept the benchmark rate unchanged at 3.75 per cent in a 9-0 vote, first unanimous decision without any dissent in four and a half years. The central bank said that it stands ready to act against the rise in inflation triggered by the war in West Asia. The two-year gilt yields jumped by 27 basis points (bps) as bonds tumbled on the Bank's hawkish tilt. Traders are pricing in nearly 3 rate hikes by the end of the year.
• The Bank of Japan left its key rate unchanged at 0.75 per cent. The BoJ's Governor Ueda suggested that the Bank was prepared for a rate hike in April if required.

Data roundup:

• Thursday’s US data showed that the weekly US job data were mixed. Net TIC flows stood at $25 billion in February. Philadelphia Fed Business Outlook improved from 16.1 to 18.3 (forecast 8) in March.  Leading Index at -0.1 per cent in January matched the estimate, while new home sales at 5,87,000 lagged the estimate of 7,22,000.
• US PPI data for February, released on March 18, were hotter than expected as companies are passing some of the cost pressure on to consumers, especially in services: PPI final demand rose 0.7 per cent month-on-month (M-o-M) (forecast 0.3 per cent, prior 0.5 per cent), whereas PPI was up 3.4 per cent year-on-year (Y-o-Y) (forecast 3.4 per cent, prior 2.9 per cent). Core PPI was up by 0.5 per cent M-o-M (forecast 0.3 per cent, prior 0.8 per cent), while it was up by 3.9 per cent Y-o-Y (forecast 3.7 per cent, prior 3.5 per cent).

Gold ETF and COMEX inventory:

As of March 18, total known global gold ETF holdings stood at 99.19 MOz, up nearly .19 MOz year-to-date (Y-T-D), but sharply down by 1.73 MOz since the Iran war started. Registered COMEX gold inventory has fallen 31.34 per cent to 16.65 MOz -- the lowest level in more than a year---from the record peak of 24.25 MOz seen in April during the 'Liberation Day' period.

 

Dollar Index and yields:

• The US Dollar Index, which has been gaining on the US energy's independence, retreated after hawkish outcomes of the monetary policy meetings of the BoE, BoJ, and ECB.
• At the time of writing, the Index was hovering around 99.79, down 0.3 per cent for the day. Two-year US yields surged by over 2 per cent to 3.86 per cent--the highest since August 1, 2025. Ten-year yields at 4.27 per cent were up by 1 per cent.

Upcoming data:

• Major upcoming US data include ADP weekly employment change (March 7), nonfarm productivity (Q4 final), unit labour costs (Q4 final), S&P global US manufacturing, and services PMIs (March 24), Import and export price indices (March 25), and University of Michigan Sentiment and inflation expectations (March 27).
• Out of Europe, focus will be on the Eurozone's and the UK's PMIs (March 24), along with UK inflation (March 25).

Outlook

• Safe haven demand for gold during escalating geopolitical tensions due to the raging Iran war has not been strong enough to overcome the dollar strength and rate pressure, as the Greenback benefits on rising energy prices.
• Continuing energy turmoil in the Middle East has made the central canks cautious regarding the possible inflationary impact, which means that the possibility of a rate hike will rise even though rising energy prices are due to a supply shock, not a demand shock. Fuel and fertilizer shortages are expected to increase food inflation if the war does not end soon. In that case, rate hikes will be highly probable.
• Falling ETF holdings even during war spell weakness in the metal during crunch time.
• Gold is expected to remain under pressure as long as energy prices remain elevated.
• Bears eye a test of $4,400 support, a breach of which could open the way to $4,150-$4,200 support band. Resistance is at $4,660/4,840/$4,900. It is advisable to sell with a tight stop loss.  

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