Gold Report – 07/02/2025—26/02/2025
Market Overview:
Gold has recently surpassed its all-time high, reflecting a positive trend in the market. Driven by factors such as geopolitical tensions, inflation concerns, and a weaker U.S. dollar, gold prices have reached new highs, attracting investor attention. However, despite the bullish market sentiment, gold has struggled to sustain these elevated price levels. We have observed that after reaching new highs, gold tends to face price corrections, suggesting a lack of sustained momentum at these higher levels.
Summary: Gold, as of February 2025, has found itself stuck in a range-bound movement, trading between the levels of ₹84,600 and ₹86,600. This analysis will delve into the reasons behind this price action, as well as the possible future price outlook based on support and resistance zones.
1. Range-Bound Movement Overview:
Since February 7, 2025, gold prices have been largely trapped within a narrow range. The lower support level is ₹84,600, while the upper resistance level stands at ₹86,600. This range-bound behavior suggests that market participants are uncertain about the short-term direction of gold.
2. Key Levels to Watch:
- Resistance Zone (₹86,600):
Gold has been facing repeated rejections at the ₹86,600 level. Although the price has been attempting to break above this level, it has not been able to sustain higher levels, suggesting a strong resistance at ₹86,600. Until gold is able to close above this level on a daily or weekly chart, a sustained bullish rally is unlikely.
- Support Zone (₹84,600):
On the flip side, ₹84,600 has acted as a solid support for gold, preventing the price from falling further. The repeated bounces off this level indicate that there is significant buying interest whenever the price nears ₹84,600. As long as gold holds above this support zone, there is little expectation of a bearish breakdown.
- Recent Market Activity:
In the past few days, gold has shown a tendency to make higher highs. However, each time the price nears the resistance zone at ₹86,600, it fails to maintain those higher levels. This could be due to profit booking by investors or traders who had bought gold during the previous rallies. As a result, gold is undergoing a series of corrective moves, where prices retrace back towards the lower support zone, only to bounce back once again.
The failure to sustain above ₹86,600 points towards a lack of buying momentum beyond this resistance, while the support at ₹84,600 remains intact, limiting the downside potential.
4. Sideways or Range-Bound Market:
At this point, gold is in a range-bound market, with both bullish and bearish scenarios being equally possible. There has been volatility in both directions: upward movements as the price approaches ₹86,600, followed by corrective pullbacks. However, until a decisive breakout occurs in either direction, gold is likely to continue trading in this range.
5. Potential Scenarios:
- Bullish Scenario:
A breakout above ₹86,600 with a sustained close above this level would signal a bullish move. This would suggest a higher probability of gold pushing towards new highs, possibly surpassing ₹87,000 or even ₹88,000 levels. Such a breakout would indicate that the market sentiment is shifting towards further price appreciation.
- Bearish Scenario: Conversely, if gold closes below ₹84,600, it would indicate a breakdown of support. This would open up the possibility of a further decline towards
₹82,000 or even ₹80,000, signaling a bearish trend.
- Factors Affecting Gold Prices:
- Global Economic Sentiment:
Gold prices are sensitive to global economic conditions. Any shift in interest rates, geopolitical instability, or changes in inflation expectations can influence the demand for gold as a safe-haven asset.
- US Dollar Movement: The value of the US dollar often has an inverse relationship with gold prices. A strengthening dollar can lead to downward pressure on gold, while a weakening dollar can bolster gold prices.
- Inflationary Pressures:
High inflation rates often drive demand for gold as a hedge, which can push prices higher. Conversely, deflationary pressures or disinflationary trends may lead to decreased demand for the precious metal.
- Conclusion:
In conclusion, gold is in a consolidation phase with a clear range between ₹84,600 and ₹86,600. The price action suggests that unless there is a decisive breakout from either of these levels, gold will continue to oscillate within this range. Traders and investors should keep a close eye on the resistance and support levels, as any breakthrough will determine the next significant move in gold prices.
Until the price either closes above ₹86,600 or drops below ₹84,600, the market will likely experience choppy price action with occasional corrections. Therefore, it’s crucial to monitor key levels, market sentiment, and external factors, such as the US dollar and global economic conditions, for potential clues on the future direction of gold.
Until then, Happy Trading!
Commodity Samachar Securities
We Decode the Language of the Markets
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