Commodity Radar: Explained: Why gold’s safe-haven appeal is weakening and how to ride the volatility

Gold traded higher on Tuesday amid positive global cues, rising by over Rs 1,200 per 10 grams intraday to hit the day’s high of Rs 1,40,482 on the MCX. Gold’s safe-haven appeal has taken a hit since the onset of the Iran–Israel/US war, contrary to expectations of a bull rally during a time of crisis.

April gold futures slipped below the Rs 1,40,000 mark on Monday on the MCX. The metal has sharply corrected from its all-time peak of Rs 1,93,096, falling by Rs 56,800 or about 29%.

Meanwhile, COMEX gold is hovering around the $4,420.10 per ounce mark. With the war now in its fourth week, spot gold is down 15%, while it has fallen 22% from its January record high, according to a Reuters report.

The rupee’s continued weakness has also failed to support bullion prices, despite the INR hitting new lifetime lows almost daily.

Trivedi said its volatility against the US dollar amplifies moves in MCX gold, and even minor global price shifts translate into sharper domestic swings, increasing intraday and weekly volatility.

Commenting on the current trends, Jateen Trivedi, Vice President and Research Analyst at LKP Securities, said gold has witnessed a sharp corrective decline after recent highs, breaking below key short-term supports and entering a volatile phase. The market is now reacting to mixed geopolitical signals — initial escalation between the US–Israel, and Iran followed by unconfirmed de-escalation talks — creating sharp two-way moves, he said.
In his view, gold is currently caught between supportive factors such as geopolitical risk premiums and negative factors like de-escalation talks reducing safe-haven demand, along with inflation concerns keeping rate cuts uncertain. “This creates a high-volatility, non-directional environment,” he added.Annualized Actual Volatility (AAV), which measures gold’s volatility on the MCX, has risen 43% over the past five trading sessions.

Trivedi suggested the following near-term strategy for traders based on gold’s current price performance:

1) Key support & resistance

Prices have broken down from the Rs 1,60,000+ zone and are now trading near Rs 1,39,000, indicating a clear short-term downtrend with panic unwinding. Immediate resistance is seen at Rs 1,42,500, while major resistance is at Rs 1,45,000. Immediate support is placed at Rs 1,38,000, with major support at Rs 1,37,500.

The current structure suggests range-bound volatility after the breakdown, rather than an immediate trend reversal, he opined.

2) Momentum indicator

The RSI is near 29, entering oversold territory. This indicates selling exhaustion may emerge, but does not confirm a reversal — it only increases the probability of sharp pullback rallies. Prices have moved to the lower band with expansion, indicating strong volatility and trend acceleration. Such moves are typically followed by short-term mean reversion or sideways consolidation.

3) Technically speaking

EMA 8: Sharp downward slope, acting as immediate resistance

EMA 21: Also turning down, confirming a bearish structure

Prices trading well below both EMAs signal trend weakness and a sell-on-rise bias.

4) MACD

The MACD is in negative territory with a widening histogram, indicating strong bearish momentum. There are no signs of a reversal yet, but oversold conditions may trigger short-covering.

Gold trading strategy

Gold is likely to remain highly volatile within this band as markets react to conflicting geopolitical updates and macro signals.

The expected trading range is Rs 1,37,500 – Rs 1,42,500.

Selling pressure is expected in the Rs 1,42,000 – Rs 1,42,500 range.

Short covering or buying support is likely to emerge at Rs 1,37,500 – Rs 1,38,000.

He suggested that traders adopt a range-bound approach rather than aggressive directional bets, and maintain strict risk management, given headline-driven volatility.

(Disclaimer: The recommendations, suggestions, views and opinions given by the experts are their own and do not represent the views of The Economic Times.)