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Gold’s recovery rally from $4402 is looking somewhat overextended as geopolitical tensions. (AI image)
Gold price prediction today: Praveen Singh, Senior Fundamental Research Analyst- Currencies and Commodities at Mirae Asset Sharekhan is of the view that the gold price rally looks overextended. What’s the outlook for gold prices in the coming days? Here’s what he has to say:Gold Performance:
- In the week ending February 6, spot gold, amid huge volatility and choppiness, ended with a weekly gain of nearly 1.43% at $4962 as it pared some of its huge losses from the all-time high level of $5595 that occurred in the wake of Kevin Warsh's nomination as the Fed Chair on January 29. Last week, the yellow metal traded between $4402--the lowest level since January 5—and $5092 (February 4). It posted a huge daily gain of 3.87% to close at $4962 on Friday as traders remained wary of geopolitical risks, concerning Iran.
- At the time of writing this article, the metal was trading with a daily gain of around 2% at $5065 as the US Dollar Index fell on worries about the US treasuries, lower inflation expectations, and healthy risk appetite. China continuing to buy gold also boosted the yellow metal. The MCX April gold contract at Rs 158,570 was up by 2%.
Geopolitics:
- Indirect US-Iran talks on February 6 in Oman concluded without reaching any definite conclusions. Both the sides remain wide apart on key issues like Iran’s ballistic missiles, Iran-supported regional militias, etc. Iran showed inclination to reach a nuclear deal through further diplomatic talks, though.
- Iran could agree to dilute its stockpile of uranium --highly enriched to 60% --provided all sanctions imposed against its nuclear program are lifted, Tehran's atomic chief Mohammad Eslami said on Monday, according to state-run ISNA.
- Israeli Prime Minister Benjamin Netanyahu will visit Washington on Wednesday to discuss US-Iran diplomacy with President Donald Trump.
Data roundup:
- New York inflation expectations data (January), released on Monday, came in at 3.09% (forecast 3.38%, prior 3.42%), lowest since July 2025, which in general is positive for commodities.
- Earlier, the University of Michigan Sentiment Index, in its January preliminary reading, rose to 57.30, a six-month high (estimate 55) as one-year inflation expectations fell from 4% to 3.5% (forecast 4%). However, job market, contrary to the Fed Chair Powell’s assessment in his January 28 FOMC presser that it is stabilizing, showed weakness: Weekly jobless claims rose to 231K from 209K, while December JOLTs job openings fell from 6928K to 6542K (estimate 7250K) -- the lowest level since the Covid days in September 2020. Job openings rate fell to 3.9% in December, the lowest since May 2020. As per ADP, the US employers added only 22K jobs in January (estimate 45K). ISM readings were reassuring though. ISM manufacturing expanded for the first time in 12 months; manufacturing expanded at the quickest pace since August 2022. ISM services in January at 53.8 beat the estimate of 53.50 (prior 53.5).
Political factors:
- Japan’s PMI Takaichi winning elections on February 8 could lead to increased borrowing and spending as Ms Takaichi is an ardent follower of Abenomics. It is a positive catalyst for gold.
- Political turmoil in the UK in the wake of the resignation of Morgan McSweeney, PM Keir Starmer’s Chief of Staff on Sunday, is also somewhat positive for the yellow metal. Morgan advised the PM to choose Peter Mandelson as ambassador to the US, despite his links to Jeffrey Epstein, and took full responsibility for his decision before tendering his resignation.
ETFs and COMEX inventory:
- As of February 6, total known global gold ETF holdings stood at 99.89 MOz as holdings slipped for the fifth straight day, though remain nearly 1 MOz (31.1 tons) up YTD.
- Registered COMEX gold inventory slipped for the fifth straight day to 18.37 MOz; the inventory is down nearly 1 MOz YTD and has declined over 24% since the record high level of 24.25 MOz seen in April 2025.
CFTC positioning:
- Money managers have decreased their bullish gold bets by 27,983 net-long positions to 93,438, weekly CFTC data on futures and options show. This position is the least bullish in 15 weeks; long-only positions fell to the lowest since in more than 23 months as short-only total rose to a ten-week high.
China continues to buy gold:
- PBoC, China’s Central Bank extended its gold buying spree to the 15th straight month as it bought 40K Ounces in January.
Chinese banks asked to pare US treasury holdings:
- Chinese regulators have advised the nation’s financial institutions to rein in their holdings of US government bonds due to concerns over market volatility, though this directive doesn’t apply to China’s state holdings of Treasuries. China-based investors’ holdings of Treasuries have fallen nearly 50% to $682.6 billion, the lowest level since 2008, from a peak of $1.32 trillion reached in late 2013. However, considering Belgian Custodial accounts of China, the decline is less pronounced.
US Dollar Index and yields:
- At the time of writing, the US Dollar Index was at 96.88, down 0.80% for the day on concerns about China reducing its US treasury holdings, though not much action was seen in the treasuries. Two-year US yields were down by 2 bps to 3.48%, while ten-year yields were flat at 3.21%.
- The Dollar Index was up nearly 1.3% in the week ending February 6. Two-year US yields at 3.49% were down by 3 bps for the week, while ten-year yields at 3.21% were down by 2 bps for the week.
Upcoming data:
- Major US data on tap this week include import price index (Feb. 10), retail sales advance (Feb. 10), January nonfarm payroll report (Feb. 11) and January CPI (Feb. 13).
- China’s PPI and CPI (January) data will be released on February 11.
- The Eurozone's 4Q final reading will be out on February 13.
Gold Price Outlook:
- Gold’s recovery rally from $4402 is looking somewhat overextended as geopolitical tensions, though remaining elevated, have subsided from the days of the US threatening the EU with tariffs over Greenland. In addition, risk appetite is reasonably healthy. However, traders are presently focusing mainly on the upcoming US job report and CPI report as weak job market indicators amid tepid inflation data have once again reignited the hopes that rate cuts could come sooner than later/there could be more than 2 rate cuts. Nonetheless, unless the US monthly job report turns out to be an absolute disaster, rate cuts may not happen before June.
- The metal, if it breaches the solid resistance at $5125, may extend its advance sharply, though it remains vulnerable if nonfarm payroll and inflation reports hurt the rate cut chances.
- Support is at $4999/$4858/$4650. Resistance is at $5125/$5200/$5315.
(Disclaimer: Recommendations and views on the stock market, other asset classes or personal finance management tips given by experts are their own. These opinions do not represent the views of The Times of India)
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