Gold experienced a notable increase of 2.17% yesterday, concluding at an unprecedented level of Rs 1,12,230, bolstered by strong safe-haven demand and heightened anticipations of additional rate cuts by the U.S. Federal Reserve. The rally intensified following remarks from St. Louis Fed President Alberto Musalem, who indicated that interest rates currently reside “between modestly restrictive and neutral,” implying a constrained potential for further reductions without entering a phase of overaccommodation. Investors are currently anticipating forthcoming speeches from the Federal Reserve and the PCE inflation report scheduled for Friday, seeking greater insight into the trajectory of interest rates.

The demand from central banks has notably increased, with net purchases rising to 63 tonnes, consistent with the average observed after 2022, thereby reinforcing optimistic market sentiment. Physical demand trends exhibited varied regional signals: in India, premiums increased to a 10-month high of $7 per ounce as festive demand continued despite record prices, whereas in China, discounts expanded to $21–$36, the most significant since May 2020, indicating a decline in investor appetite. In August, Switzerland’s bullion exports to China experienced a remarkable increase of 254%, reaching 35 tonnes. In contrast, shipments to India saw a modest rise to 15.2 tonnes, which helped to counterbalance a significant drop in exports to the U.S.

Gold is currently experiencing short covering, evidenced by a decline in open interest of -11.25% to 10,711, while prices surged to Rs 2,383. Immediate support stands at Rs 1,10,855, followed by the subsequent level at Rs 1,09,480. On the upside, resistance is positioned at Rs 1,12,950, and a breach above this level could propel prices towards Rs 1,13,670.