Gold price outlook: MCX gold rate may hit ₹94,000 level as Israel-Iran ceasefire, trade talks dent safe-haven demand

Easing Geopolitical Tensions Dent Gold’s Safe-Haven Appeal

In a significant development for global financial markets, gold prices are witnessing a downward correction, with analysts predicting that MCX gold may decline towards ₹94,000 per 10 grams in the near term. This comes as easing geopolitical tensions, particularly a ceasefire agreement between Israel and Iran and positive progress in US-China trade negotiations, reduce safe-haven demand for the precious metal.

Over the past year, gold prices surged globally due to a mix of inflationary pressures, interest rate uncertainties, and geopolitical unrest. However, the latest developments have shifted investor sentiment, prompting a re-evaluation of risk appetite across global markets.

Ceasefire Between Israel and Iran Lowers Risk Premium

The most immediate factor weighing on gold prices is the unexpected yet welcome ceasefire between Israel and Iran after months of escalating conflict that raised fears of a wider Middle Eastern war. The agreement, brokered by the United Nations with backing from the United States and European Union, has led to a rapid cooling in regional tensions.

"Geopolitical risk was the primary driver pushing gold toward all-time highs earlier this year. With that threat now contained, at least for the moment, investors are rotating out of safe-haven assets," said Harish Jain, Head of Commodities Research at Karvy Broking.

The ceasefire has led to a sharp decline in oil prices and volatility indices, signaling a broader improvement in global risk sentiment. This trend has had a spillover effect on precious metals, particularly gold, which tends to rise during periods of uncertainty.

US-China Trade Talks Restore Market Confidence

Adding further pressure to gold prices is the renewed optimism surrounding trade discussions between the United States and China. The two nations, which have experienced a series of trade flare-ups over the past several years, have recently agreed to restart tariff rollback negotiations and work toward a new digital trade agreement.

"The revival of diplomatic and economic ties between the world's two largest economies is boosting investor confidence in equities and commodities outside the precious metals complex," said Devika Sharma, Senior Economist at Motilal Oswal Financial Services.

The resulting strength in global equity markets has led to capital outflows from gold-backed ETFs and futures markets. According to data from the World Gold Council, global gold ETF holdings declined by over 30 tonnes in June alone, reflecting this trend.

MCX Gold Technical Outlook: ₹94,000 on the Horizon

On the Multi Commodity Exchange (MCX), gold futures for August delivery were last trading at ₹96,200 per 10 grams, down nearly ₹2,800 from their recent peak. Technical analysts suggest that the current downtrend could persist in the near term.

"₹94,000 is emerging as a strong support level for MCX gold. If the metal fails to hold above ₹95,000 this week, a test of ₹94,000 is highly probable," said Anuj Gupta, Head of Commodity & Currency at HDFC Securities.

He further noted that a break below this level could open the door to deeper corrections, particularly if inflationary data from the US and India continue to surprise on the downside.

Global Factors Also Playing a Role

Beyond geopolitics and trade, several global macroeconomic factors are contributing to the shift in gold dynamics. The US Federal Reserve recently indicated that it could begin rate cuts by late 2025, but with inflation moderating, the urgency for safe-haven investments like gold is waning.

Moreover, the dollar index has remained firm near 106 levels, making gold more expensive for buyers in other currencies and thereby dampening demand.

"Central banks, which were aggressive gold buyers in 2023 and early 2024, have slowed down their accumulation due to stabilizing currencies and economic outlooks," observed Ashutosh Tiwari, macro strategist at Edelweiss Wealth.

Investor Outlook: Time to Rebalance Portfolios?

For retail and institutional investors, the current environment presents a mixed bag. While long-term fundamentals for gold remain intact due to persistent global debt levels and potential inflationary flare-ups, short-term headwinds are evident.

"We advise investors to maintain a diversified allocation. Gold should still form about 10–15% of the portfolio, but this may be a good time to take some profits and rotate into undervalued equity or debt instruments," said Jyoti Prasad, Director of Investment Advisory at Axis Securities.

However, she added a caveat: “Any breakdown in the current geopolitical ceasefires or resurgence in inflation could quickly restore the bullish momentum in gold.”

Tactically Bearish, Strategically Cautious

While the long-term case for gold as a store of value remains valid, especially in an increasingly uncertain macroeconomic landscape, the near-term trajectory appears downward. A combination of easing geopolitical tensions, improved global trade sentiment, and technical corrections could see MCX gold testing the ₹94,000 level in the coming weeks.

Investors should tread with caution, keeping a close eye on upcoming macroeconomic data releases, central bank signals, and geopolitical flashpoints, all of which could swing gold’s momentum in either direction.