New Delhi, March 22 Precious metal prices are likely to stabilize with a slight upward bias next week after a sharp decline, although the potential for further gains may be limited due to high interest rates and a strong US dollar, analysts said.
Investors will closely watch key macroeconomic data, including provisional manufacturing and services PMI readings from the US, UK, and Japan, as well as consumer sentiment and unemployment claims, for guidance.
Traders will also closely monitor oil price movements for further cues, they added.
"In the coming week, gold prices may see some consolidation and a slight recovery before prices move in either direction," said Pranav Mer, Vice President, EBG - Commodity & Currency Research, JM Financial Services Ltd.
Precious metal prices experienced significant losses in the domestic market last week.
On the Multi Commodity Exchange, silver fell by Rs 32,663, or 12.59 percent, to settle at Rs 2.26 lakh per kilogram, while gold dropped by Rs 13,974, or 8.82 percent, to close at Rs 1.44 lakh per 10 grams.
Mer said that the decline in gold prices continued throughout last week, with domestic prices falling below Rs 1.45 lakh per 10 grams, reflecting a decline of around 9-9.5 percent.
The sell-off accelerated mid-week following policy signals from major central banks, including the US Federal Reserve, Bank of Japan, Bank of England, and the European Central Bank, which raised concerns about rising crude oil prices and inflationary pressures, indicating that monetary easing is unlikely in the near future.
In international markets, precious metals also experienced significant declines. Silver futures on Comex fell by USD 11.68, or 14.36 percent, to USD 69.66 per ounce, while gold plunged by USD 486.8, or 9.6 percent, to USD 4,574.9 per ounce over the past week.
NS Ramaswamy, Head of Commodity & CRM at Ventura, said that gold may trade in a moderately bearish to sideways range in the coming weeks, with prices likely to stabilize after the recent sharp decline but remain prone to volatile intraday swings.
He noted that a strong US dollar hovering near the 99-100 range and high interest rates continue to put pressure on gold's recovery.
The US Federal Reserve's resistance to expectations of interest rate cuts, along with rising energy costs complicating inflation control, has led financial markets to postpone expectations of monetary policy easing until 2026, reducing the appeal of the safe-haven asset, Ramaswamy said.
However, he added that global central banks are unlikely to alter their long-term gold accumulation strategies, suggesting that demand for the metal remains strong.
Geopolitical factors have provided limited support to prices, although gold continues to act as a safe-haven asset, offering protection against downside risks.
In the domestic market, seasonal demand from the upcoming wedding season and festivals such as Akshaya Tritiya may provide some support to prices in the near term.
