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Informist, Wednesday, Jul. 2, 2025

 

MUMBAI – Gold prices, which had risen to multiple highs in the past few months, have lost steam, and have been stuck in a range for a few weeks now. BMI, a Fitch solutions company, believes that prices are not likely to rise further in the near future unless there is a major trigger.

 

"While gold remains on a pedestal due to trade uncertainties, heightened geopolitical tensions (especially in the Middle East), a weaker US dollar, and increasing central bank purchases, we note that the rally seems to have run its course with downside pressures building," the agency said in a report.

 

"We now believe that it will take either a regional war in the Middle East (low probability) or a large interest rate cut by the US Fed for gold to break through the last historical high of $3,500/oz reached in April 2025," it added.

 

On the whole, the agency has maintained its annual average gold price forecast for 2025 at $3,100 per ounce and is "neutral towards the asset class for the coming months," it said.

 

The report observed that despite the spike in political risk in June due to the Israel - Iran war, gold prices remained tepid, indicating that geopolitical risk premia were mostly priced in since October 2023 from the start of the Israel-Palestine conflict.

 

"Following Israel's attack on Iran on June 13, gold surged to a seven-week intraday high of $3,451/oz on June 16 (still not breaking historical highs of $3,500/oz reached in April 2025), only to retreat following the announcement of a ceasefire," the report said.

 

Predicting lower prices ahead, the report said downward pressure is building up. "With gold increasingly showing signs of desensitisation to a weaker US dollar, lower bond yields and geopolitical tensions, we see rising downside risks that could bring gold prices back near $3,000/oz in the coming days."

 

The report also pointed out factors that could support gold prices at the lower levels. "We expect the US Fed's rate cut announcements later in 2025 and 2026 to hold the key to gold price increases going forward. Additionally, we expect gold to continue benefiting from increased central bank purchases and uncertainty surrounding the Trump Administration's trade policy shifts, which will place a floor under bullion, around the $2,800/oz level."

 

Also driving gold prices in coming months will be, as per the report, factors like US dollar strength, global growth outlook, inflation, and geopolitical risks.  End

 

 

US$1 = INR 85.71

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Reported by Abhijit Doshi

Edited by Deepshikha Bhardwaj

 

 

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