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Published: October 1, 2024
Updated: October 1, 2024

Gold Prices See Volatile Movement Amid Israel-Iran Conflict: Should You Invest Now?

Domestic Gold Prices Gain Despite Global Decline

Amid global market fluctuations, the gold price in India climbed 0.60% last week, closing at ₹76,190 per 10 grams, while international spot gold prices dipped by 0.40% to $2,653 per troy ounce. The rise in Indian gold prices occurred despite a broader decline in global markets, driven mainly by the weakening of the Indian Rupee (INR) against the US dollar. A 0.40% depreciation in the INR bolstered the domestic price of gold, shielding it from international market downturns.

Impact of US Dollar and Economic Data

Gold's upward momentum faced resistance as the US dollar rebounded in the Forex market. According to Sugandha Sachdeva, founder of SS WealthStreet, a stronger-than-expected US employment report for September, which added 254,000 jobs (far exceeding forecasts), has tempered expectations for further aggressive rate cuts by the Federal Reserve. The dip in the US unemployment rate to 4.1% from a predicted 4.2% added further weight to the dollar’s rally. As the dollar gained strength, gold’s appeal diminished, cooling down the recent surge in gold prices.

Geopolitical Tensions Fuel Gold's Safe-Haven Appeal

The ongoing Israel-Iran conflict has reinforced gold’s safe-haven status, with investors seeking refuge amid escalating tensions in the Middle East. Sugandha Sachdeva noted that while gold faces resistance at $2,680 per ounce in international markets and ₹76,600 per 10 grams in India, the demand for gold as a hedge against uncertainty remains strong. Should the conflict drag on, gold prices are likely to maintain support at lower levels, providing a cushion for investors.

Buying Opportunity: What Experts Suggest

Praveen Singh, Associate VP of Fundamental Currencies and Commodities at Sharekhan by BNP Paribas, suggests adopting a buy-on-dips strategy in light of the geopolitical crisis. Gold is expected to hover between $2,620 and $2,685 in the international market as traders await key US economic data. He added that a surprise from the US nonfarm payroll report could push gold to the lower end of that range, creating an attractive entry point for investors.

Future Outlook: What to Expect Next

As the Israel-Iran conflict continues, market experts anticipate a growing demand for gold. Sachdeva pointed out that gold prices have found a strong support base between ₹75,000 and ₹75,200 per 10 grams. Should the price break above ₹76,600, it could swiftly move toward ₹78,000 per 10 grams in the near term. Investors are encouraged to watch the market closely, especially as geopolitical risks persist, keeping gold’s safe-haven allure intact.

A Long-Term Investment Haven Amid Uncertainty

In the current volatile geopolitical and economic environment, gold remains an attractive asset for risk-averse investors. While the strengthening US dollar may dampen gold's performance in the short term, the ongoing Middle Eastern conflict could drive further demand for the precious metal.