Gold prices increased by 0.85% to Rs 1,20,666, buoyed by bargain hunting in anticipation of the U.S. Federal Reserve’s rate decision. The Federal Reserve reduced interest rates by 25 basis points to a range of 3.75%–4%, representing the lowest level since 2022. Chair Powell suggested a potential pause in additional cuts for the remainder of the year. Gains were limited as investors kept a close watch on developments regarding a potential U.S.–China trade agreement, which may diminish the demand for safe-haven assets.

Notwithstanding this, gold is poised to achieve its third consecutive monthly increase, having risen nearly 50% year-to-date, propelled by central bank acquisitions, geopolitical uncertainties, and concerns regarding currency devaluation. In India, physical demand has weakened as purchasers anticipate additional price adjustments after the festive buying period of Dhanteras and Diwali, although premiums have remained stable at $25 per ounce. In the interim, demand has increased in China and Singapore, driven by lower prices that have stimulated purchasing interest.

Gold in China fluctuated between discounts of $20 and premiums of $8, whereas in Japan, it held a premium of $1. Data indicated that gold exports to China experienced a remarkable increase of 254% in August, reaching 35 tons, while shipments to India also rose to 15.2 tons, compensating for a significant decline in exports to the U.S.

Gold is currently experiencing short covering, evidenced by a 0.68% decline in open interest to 12,784 lots, alongside a price increase of Rs 1,020. Immediate support is positioned at Rs 1,19,460; a decline beneath this level may lead to a test of Rs 1,18,260. Conversely, resistance is identified at Rs 1,21,750, with a breach above this threshold potentially propelling prices toward Rs 1,22,840.