Gold prices experienced a decline of 5%, settling at Rs 1,21,857, as profit-taking became more pronounced after a significant rally. This shift occurred concurrently with a strengthening U.S. dollar and a reduction in safe-haven demand, reflecting an improvement in global risk sentiment. Optimism increased regarding the alleviation of U.S.–China trade tensions in anticipation of the upcoming meeting between Presidents Donald Trump and Xi Jinping next week, which seeks to address tariff disputes.

The conclusion of the seasonal gold-buying period in India has diminished physical demand, while anticipations surrounding a resolution to the U.S. government shutdown and forthcoming U.S. inflation data have additionally impacted sentiment negatively. In light of the recent sharp decline, gold continues to exhibit a year-to-date increase of over 60%, bolstered by anticipations of further rate cuts from the Federal Reserve and sustained demand for safe-haven assets.

Physical demand throughout Asia has demonstrated resilience, as Indian dealers are reporting premiums reaching $25 per ounce — the highest level observed in a decade — driven by vigorous festive purchasing and supply constraints that have concurrently heightened instances of gold smuggling. Swiss customs data indicated that gold exports to China experienced a remarkable increase of 254% in August, reaching 35 tons, while shipments to India rose to 15.2 tons. Nonetheless, exports to the U.S. experienced a significant decline as refineries halted shipments due to tariff-related uncertainties.

From a technical perspective, the market is experiencing long liquidation, evidenced by a 6.16% decline in open interest to 13,431 contracts, alongside a price decrease of Rs 6,414. Gold establishes support levels at Rs 1,20,105 and Rs 1,18,355, with resistance identified at Rs 1,24,015 and Rs 1,26,175. A breach of Rs 1,24,015 could catalyze short covering, potentially driving prices upward.