The backdrop, meanwhile, remains anything but stable. While a ceasefire may exist on paper, tensions continue to simmer. US President Donald Trump has reportedly asked aides to prepare for a prolonged blockade of Iran. In response, Iran has shut the strategically vital Strait of Hormuz, a route that handles nearly 20% of global oil and LNG flows, while the United States has tightened pressure through continued restrictions on Iranian ports.
Yet, instead of rallying on fear, gold has remained subdued, trapped in a narrow range of $4,600 to $4,800 since mid-March. April offered little excitement, with prices ending virtually flat, rising just 0.03% to close at Rs 1.51 lakh per kilogram. In a market where fear would typically spark a surge, gold’s muted response highlights a far more complex interplay of forces.
Why is this happening?
Nireprendra Yadav, Senior Commodity Analyst at Bonanza, explains that while gold appears range-bound, the underlying dynamics go well beyond simple consolidation.
The market is currently caught in a tug-of-war between opposing macro forces. On one side, persistent geopolitical tensions, particularly the Iran conflict, and continued central bank buying are offering structural support. On the other, elevated bond yields, expectations of prolonged higher interest rates with no immediate rate cuts from the Federal Reserve, and a strong US dollar are capping any meaningful upside.This contradiction is clearly visible in recent price action. Gold futures surged above $5,600 per ounce in early 2026, only to retreat by nearly 10-12% following an escalation in the Iran conflict, signalling profit booking and macro-driven volatility rather than a sustained directional trend.From a technical standpoint, the monthly chart points to caution. Prices remain near elevated levels but have declined for two consecutive months, forming a bearish engulfing pattern. Momentum indicators are also beginning to weaken, with the monthly MACD turning negative, while the RSI hovers near 73, indicating overbought conditions and the likelihood of a significant move ahead.In the near term, gold is expected to remain range-bound, lacking a clear directional trigger. The next decisive move will largely depend on monetary policy. A slowdown in economic growth that forces the Federal Reserve to pivot towards rate cuts could revive gold’s upward trajectory. Conversely, if inflation remains sticky and interest rates stay elevated, the metal may continue to consolidate.
Key levels are crucial at this juncture. On the downside, $4,500 per ounce is an important support; a decisive break below this could open the door to $4,350. On the upside, if this support holds, a rebound towards $5,200 remains possible, especially as prices continue to trade above key moving averages.
In the domestic market, MCX gold mirrors this setup, with strong support at Rs 144,000 and resistance at Rs 161,000.
Time to buy?
Ponmudi R, CEO of Enrich Money, believes the decision for investors should not hinge on perfectly timing the market. Gold is not a high-return chasing asset, it is a stabiliser within a portfolio. The focus, therefore, should be on gradual allocation rather than aggressive entry.
Investors with no exposure can begin building positions, while those already heavily invested should avoid over-allocation. The objective is balance, where gold serves as a hedge against uncertainty, while other assets drive long-term growth.
Yadav echoes a similar stance, noting that the current market does not offer a straightforward “buy” or “avoid” signal. He cautions against aggressive positioning, highlighting the lack of a clear trend and the risk of short-term volatility.
Instead, a staggered investment approach is recommended. This involves initiating a partial allocation at current levels, adding on meaningful corrections of 5-10%, and completing investments during sharper, panic-driven declines. Such a strategy helps improve the average entry price while reducing timing risk.
The key variable to watch, he adds, is not inflation alone but real interest rates. Any shift in central bank policy, particularly signals of rate cuts, could act as a decisive catalyst for gold. Until then, the metal is likely to remain volatile without a sustained trend. Overall, the current environment calls for discipline and patience rather than aggressive, all-in buying. Investors who stick to a structured approach and avoid trying to time the market are likely to be better positioned when a clearer trend eventually emerges.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
