Gold price outlook: Is yellow metal headed for short-term bounce amid falling investors demand for safe-haven assets?

Gold price outlook: Gold Futures on India's Multi Commodity Exchange (MCX) closed 0.74 per cent or ₹689 per 10 grams lower on Friday, 16 May, 2025, as investors' demand falls for the safe haven gold over the trade agreement between the United States and China. 

Gold futures fell 0.74 per cent to ₹92,480 per 10 grams as of Friday, 16 May 2025, compared to ₹93,169 per 10 grams at the previous commodity market close, according to the data collected from MCX.

Gold prices in India, along with the US-based Comex gold rates, dropped after the first move of de-escalation since US President Donald Trump announced his reciprocal tariffs on world nations, giving rise to a tariff war.

The US-China deal to reduce tariffs has increased investors' optimism of an easing tariff war, fueling the demand for equity markets over gold. In times of this optimism, gold prices fall as investors withdraw their money to invest in high-risk assets like stocks. 

Reduced market anxiety?

Jigar Trivedi, Senior Research Analyst at Reliance Securities, highlighted how the positive geopolitical developments, like the temporary truce between India and Pakistan, along with the 90-day tariff pause between the US and China have contributed majorly to the improving global sentiment which in turn reduced the demand for safe haven gold.

The June contract of MCX gold lost more than 3.5 per cent or over ₹3,000 per 10 grams before closing at nearly the ₹92,000 level at the end of the week.

However, the negotiations between Russia and Ukraine remain uncertain in the current market.

“On the macroeconomic front, softer-than-expected U.S. inflation data bolstered expectations that the Federal Reserve will move ahead with interest rate cuts, possibly as soon as the second half of the year. Fed Chair Jerome Powell also signaled potential challenges ahead, cautioning that supply-side shocks may make inflation more volatile and harder to manage,” said the commodity market expert. 

Gold Price Outlook for next week

The commodities experts highlighted the bearish outlook for gold prices in the upcoming week. Some expect that the precious yellow metal can likely bounce in the short term amid the prevailing downside pressure. Others recommend not investing fresh capital in gold and awaiting further confirmation before placing bearish bets.

“Gold’s technical outlook remains bearish. After a sharp weekly decline, a modest short-covering bounce is possible. However, unless MCX Gold June futures close decisively above ₹92,000 per 10 grams, downside pressure is likely to persist. The next support is seen around ₹90,000. Given the weak undertone and chart structure, we recommend adopting a sell-on-rise strategy in the near term,” said Jigar Trivedi.

“Short-term moving averages are heading toward a bearish crossover. A breakdown below the double top pattern is likely to trigger bearish momentum. Fresh investments should be avoided, and traders are advised to wait for confirmation before placing bearish bets,” said the analysts at Way2Wealth Brokers (part of Shriram Group) ahead of Friday's market close.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.