Gold prices surged by 1.81% to settle at Rs 1,20,249, driven by renewed safe-haven demand amid escalating concerns over the prolonged US government shutdown, which was extended after the Senate failed to reach a funding deal. The shutdown has postponed the release of crucial economic data, such as the September non-farm payrolls report, compelling traders to rely on alternative labor indicators that imply a deteriorating job market.

This development has bolstered expectations for a forthcoming Federal Reserve rate cut, as markets are currently assigning a 95% probability to a 25 basis points reduction in October and an 84% likelihood for December. On the physical side, demand dynamics exhibited a mixed performance. India experienced an increase in gold demand, even in the face of record-high prices, driven by festive purchasing that enhanced market sentiment.

Local dealers reported a premium of as much as $9 per ounce above official prices. In September, India’s imports of gold and silver experienced a significant increase, nearly doubling in comparison to the previous month of August. In contrast, China’s net gold imports via Hong Kong experienced a decline of 39.11% in August, attributed to holiday closures. However, Swiss exports to China saw a remarkable increase of 254%, indicating robust underlying demand. Singapore and Japan experienced consistent premiums fluctuating between $1 and $2.20 per ounce.

Gold is currently experiencing renewed buying momentum, as evidenced by a 1.26% increase in open interest, reaching 15,784 lots. The metal exhibits immediate support at Rs 1,19,230; a decline below this threshold may lead to a test of Rs 1,18,215. Conversely, resistance is identified at Rs 1,20,930, with a breach of this level potentially propelling prices towards Rs 1,21,615.