Gold prices experienced a notable decline of 2.2%, settling at Rs 1,20,493 per 10 grams. This drop can be attributed to a strengthening dollar and profit-taking by investors following the announcement of a ceasefire agreement between Israel and Hamas. The decline ensued after a record-high rally, propelled by geopolitical tensions and anticipations of U.S. rate cuts. The most recent FOMC minutes indicate that a majority of Federal Reserve officials consider it suitable to guide the federal funds rate toward a neutral level in light of increasing downside risks to employment, despite ongoing concerns regarding inflation.
Approximately fifty percent of Federal Reserve policymakers anticipate two further reductions in interest rates by the conclusion of 2025. IMF Managing Director Kristalina Georgieva observed that the U.S. economy continues to demonstrate resilience, evidenced by a 3.8% growth in the second quarter. However, the challenges of slowing disinflation and ongoing service inflation complicate the prospects for further easing. The physical demand for gold in India exhibited resilience in the face of elevated prices, bolstered by festive purchasing activities, as dealers imposed premiums reaching $9 per ounce.
In September, India’s imports of gold and silver experienced a near doubling, while Switzerland’s gold exports to China saw a remarkable month-on-month increase of 254%, reaching 35 tons. Additionally, shipments to India climbed to 15.2 tons, indicative of strong demand in the Asian market. Nonetheless, exports to the U.S. experienced a significant decline due to uncertainty surrounding tariffs.
From a technical perspective, the market is experiencing renewed selling pressure, evidenced by a 3.77% increase in open interest to 16,582, alongside a price decline of Rs 2,716. Gold currently finds itself with immediate support at Rs 1,19,255; a breach of this level may lead to a test of Rs 1,18,010. Resistance is established at Rs 1,22,710, with additional upward potential toward Rs 1,24,920 contingent upon the resumption of buying activity.