Motilal Oswal continues to maintain ‘buy on dips’ stance on gold

Motilal Oswal Financial Services (MOFSL) continues to maintain ‘buy on dips’ on gold. The company also recommends investors to start accumulating near the support zone for a long-term target of Rs 1.06 lakh. It sees support around Rs 90,000 - Rs 91,000 and resistance near Rs 99,000 in the medium to long term.
As per the company analysis, the first quarter of 2025, gold and silver was as astounding as the last year.

In Q1’25, gold posted gains of over 18%. In the new financial year as well, the rally continued, as gold marked an all-time high of $3500 and very close to Rs.1 lakh. However, the tide turned quickly, as a sharp sell-off was witnessed moving forward, from record highs.

Manav Modi, Senior Analyst, Commodity Research at Motilal Oswal Financial Services says, “Demand and supply factors historically have not directly made an impact on gold prices, and especially in a scenario where there are more overpowering uncertainties present in the market. Gold prices have posted a sharp rally over the last couple of months, hence some cool off in prices cannot not be ruled out. "

He also added," There are both positives and negatives for gold prices at this juncture, mixed economic data points, tariff war, higher inflation expectations, rise in slower growth concerns, rate cut expectations, geo-political tensions, concerns regarding rising debt, increase in demand and fall in US Yields could act as tailwinds for prices.” 

As per MOFSL major factors which induced volatility in gold market are, firstly, President Trump’s tariff threats and tariff war with China and major nations – both US and China had levied more than 100% tariff on each other. In April 2025, gold prices experienced significant fluctuations driven by President Donald Trump’s economic policies. Against this backdrop, gold surged to a record $3,500, as investors sought safety amid Trump’s tariff threats and public attacks on Fed Chair Jerome Powell, raising fears over the Fed’s independence.

However, the rally was short-lived, as towards the end of last week in April, gold prices fell by more than 2% from an all-time high, as signs of easing U.S. China trade tensions emerged.

Secondly, the geopolitical tensions war-like scenario in Middle East, China-Taiwan and elsewhere have been developing over the years and could impact the bullion market. Similarly, the Fed monetary policy and its intent for an interest rate cut could lead to the volatility.

Lastly, the Central Bank continued to be a net buyer of Gold even in 2025, however, the buying has slowed amidst elevated gold prices. Amidst many positives, there are some factors that are adding a cap to the gains. Demand destruction in physical demand is a concern with gold prices surging to record highs and domestic physical market trading at a discount over the last few months. Higher discounts indicate weakened demand, hence, sustained lower demand in the physical gold market could weigh on overall market sentiment.