Gold yesterday settled marginally down by -0.02% at Rs 1,10,156 amid profit booking, as investors processed stronger-than-expected US economic data while anticipating the Federal Reserve’s policy decision on Wednesday. In August, retail sales increased beyond expectations, while import prices experienced their most significant rise in seven months, catching analysts off guard who had forecasted a decrease.

In light of the robust data, indications of a softening US labor market have persisted in bolstering anticipations that the Fed will implement a 25 basis point rate cut—the inaugural adjustment since December—and may also hint at a prolonged easing cycle extending into 2026. This year, gold has experienced a rally of around 40%, driven by geopolitical tensions, robust central bank demand, and consistent inflows into ETFs. Commerzbank has adjusted its gold price outlook to $3,600 per ounce by the end of the year and $3,800 by the conclusion of 2026. In contrast, UBS anticipates a price of $3,800 by the end of 2025 and $3,900 by mid-2026, attributing these projections to the easing of Federal Reserve policies and the weakening of the dollar.

Demand for physical gold in Asia has been lackluster, as elevated prices have discouraged retail buying, prompting China to provide discounts ranging from $17 to $24 per ounce. Nevertheless, China’s central bank has maintained its gold acquisitions for the 10th consecutive month. In India, discounts decreased to $6 from a previous high of $12 last week, whereas Hong Kong and Singapore experienced minor premiums.

From a technical perspective, the market is experiencing long liquidation, as evidenced by a decline in open interest of 7.55%, bringing it down to 14,394. Gold currently establishes a support level at Rs 1,09,885, with the potential for a further examination of Rs 1,09,610 should this support falter. Resistance is positioned at Rs 1,10,550, and a persistent advance beyond this level may aim for Rs 1,10,940.