It is no secret that several critical factors drove the recent rally in gold prices. The gradual removal of these conditions could trigger a significant price decline.

Gold's upward movement has been supported by rising geopolitical tensions globally, particularly in the Middle East and in Europe, amid the ongoing crisis in Ukraine. This has been accompanied by a shift in U.S. foreign and trade policy aimed at reinforcing its global dominance through trade and tariff conflicts, which diminished the appeal of the dollar as a reserve and safe-haven currency. Additionally, the Federal Reserve's return to cutting interest rates made U.S. government bonds less attractive by comparison, increasing demand for non-yielding assets like gold.

More recently, signs of stabilization have emerged. The United States has managed—at least for now—to de-escalate tensions in the Israel–Palestine conflict. Dialogues between President Donald Trump and President Vladimir Putin have resumed. These developments have shifted the broader geopolitical landscape, dampening safe-haven demand and halting gold's surge.

Markets understand that price growth driven by fear and uncertainty cannot be sustained indefinitely. As diplomatic relations begin to normalize, risk appetite is likely to recover, causing capital to flow back into riskier assets. This transition reduces the relative attractiveness of defensive assets like gold, increasing the likelihood of a correction or consolidation.

Although prices have shown extreme highs in recent months, the possibility of a decline or sideways range is growing. However, the exact timing of this shift remains uncertain, and as long as ambiguity persists around geopolitical issues, residual upward momentum in gold may intermittently return.

Looking at the market landscape, activity is expected to be subdued. Investors await U.S. consumer inflation data, scheduled for release later in the week, which may provide clarity on future Federal Reserve policy moves. Additionally, attention is focused on the renewed diplomatic negotiations between Russia and the United States concerning the Ukraine crisis. Market participants are likely to remain cautious, holding positions within previously established ranges until these narratives unfold.

Forecast for the Day

In gold, prices remain below the resistance level of 4,273.60. The continued easing of geopolitical tension could weaken demand for gold, pushing prices down to the support level at 4,185.40. The level at 4,237.17 may serve as a technical entry point for short positions.

Silver is trading below its current resistance at 50.40. A further decline may lead to a correction toward 48.45, with 46.65 acting as a viable level for initiating sell trades.