Gold Price Rally Continues with Strong Long-Term Support
Gold prices are extending their rally this week, maintaining robust support in the long term, according to Maneesh Sharma, AVP - Commodities & Currencies at Anand Rathi Shares and Stock Brokers. The expert outlines the top factors that will determine the direction of gold prices in the coming days, emphasizing both near-term pressures and structural strengths.
Near-Term Trading Dynamics and Market Catalysts
Gold struggled for direction this week, with overall trading activity subdued due to a lack of fresh market-moving catalysts. It briefly slipped below the psychological $5,000 level during early sessions but remains above this threshold. Global equities extending their rally are weighing on bullion in the near term, while a broadly weaker US Dollar and softer US Treasury yields are helping to cushion the downside, limiting losses and keeping gold rangebound.
Last week, gold witnessed sharp two-way movements, initially extending its correction from record highs as profit booking, higher exchange margins, and a rebound in the US dollar triggered heavy liquidation. It later stabilized near key technical support around the 50-day moving average. Spot prices rebounded nearly 4% on Friday to close near $4,965 after successfully defending the $4,700–4,750 demand zone, indicating institutional buying and bargain hunting rather than panic selling. Geopolitical risk premiums eased slightly amid improving US-Iran diplomatic signals.
Structural Support from Central Bank Demand
Central bank demand remains a strong pillar for gold. China's People's Bank of China added gold for the 15th consecutive month, reinforcing sustained official-sector buying. This trend is a key structural support behind gold's multi-year rally and provides a strong floor during corrections. Structurally, gold is well supported in the long term by central-bank buying, with 700–750 tonnes expected in 2026, ETF inflows, reserve diversification, and easing-rate expectations.
Technical Levels and Market Focus
The yellow metal is attempting to build a base, with $5,000 now serving as the pivotal near-term level. Holding above this level would strengthen the case for a move toward resistance at $5,090–$5,140, while failure risks a slide back toward the $4,750 support zone. Markets are closely focused on upcoming US economic data, including jobs and inflation figures, for clarity on Federal Reserve rate cuts, dollar direction, and lingering concerns over Fed independence. Continued central-bank buying, especially from China, keeps the broader bullish structure intact despite near-term range trading.
Reaction to Economic Data and Global Developments
Traders showed a muted reaction to the latest US Retail Sales figures, with Headline Retail Sales flat in December. Attention now turns to the delayed Nonfarm Payrolls report on Wednesday, followed by the Consumer Price Index release on Friday. In a related development, China has urged domestic banks to curb their exposure to US Treasuries due to market-risk concerns, as reported by Bloomberg News. In response, US Treasury yields remain under pressure across the curve, with the benchmark 10-year yield extending its decline for a second straight day and hovering near 4.18%.
Disclaimer: Recommendations and views on the stock market, other asset classes, or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India.
