Gold Price Outlook: West Asia, Oil, Inflation Data Key Drivers

New Delhi, Jun 7 (PTI) Gold prices will remain sensitive to developments in West Asia, movement in crude oil prices, and a series of key economic data releases in the coming week, analysts said.

Investors will monitor trade and inflation data from China and the US, mid-month Washington's consumer sentiment figures and India's Consumer Price Index (CPI) readings.

The European Central Bank's monetary policy decision will also be in focus as market participants assess their impact on bullion and other commodities, they added.

"Momentum for precious metals such as gold and silver still looks corrective," Pranav Mer, Vice President, EBG -- Commodity & Currency Research, JM Financial Services Ltd, said.

Domestic commodity markets ended the week lower, with MCX gold futures for August delivery falling Rs 5,317, or 3.3 per cent, to Rs 1.55 lakh per 10 grams.

Silver for July delivery fell Rs 18,461, or 7 per cent, to Rs 2.48 lakh per kilogram on the Multi Commodity Exchange (MCX).


"Gold witnessed a weak performance last week as rising crude oil prices diverted market attention away from safe-haven assets," Jateen Trivedi, VP Research Analyst, Commodity and Currency, LKP Securities, said.

The rupee strengthened against the US dollar, adding further pressure on precious metals. As a result, domestic bullion underperformed than its international counterpart, with currency gains offsetting part of the support from global gold prices, he added.

In the global markets, Comex gold futures shed USD 227.7, or 5 per cent, to end the week at USD 4,365 per ounce, while silver fell USD 6.77, or nearly 9 per cent, to USD 69.10 per ounce.

Gold prices faced pressure in the overseas trade and closed the week down nearly 5 per cent, while silver, too, sold-off sharply tracking a sharp corrective move in industrial metals, Mer said.

"Stronger-than-expected US PMI and labour market data reinforced expectations of higher-for-longer interest rates, while a firm US dollar and exchange traded fund outflows weighed on bullion," he added.

According to analysts, indications from Russian-Ukrainian leaders that the conflict could end soon have reduced the demand for bullion.

Going ahead, precious metals may remain vulnerable if international prices stay below the USD 4,400-4,500 per ounce range, while a firm rupee, elevated crude oil prices and cautious investor sentiment could cap any sharp recovery, Trivedi said.