Gold prices experienced a significant correction, closing lower by 3.53% at Rs 134,942, as investors took profits and the perception of eased geopolitical risks reduced the demand for safe-haven assets. Sentiment deteriorated following US President Donald Trump’s announcement of advancements in discussions with Ukrainian President Volodymyr Zelensky regarding a possible peace agreement, despite the persistence of critical territorial disputes. In a further development, US macroeconomic indicators remained favorable, as evidenced by weekly Initial Jobless Claims declining to 214,000, significantly undercutting forecasts and bolstering confidence in the labor market.
Markets are currently factoring in two rate cuts from the Federal Reserve next year, assigning an 18.3% likelihood to a cut in January. Meanwhile, comments from Trump regarding the maintenance of low rates have reignited worries about the independence of the Federal Reserve. Physical market signals exhibited a mixed performance. Gold discounts in India have expanded to exceed six-month peaks, reaching up to $61 per ounce, as high prices have dampened retail demand.
Conversely, discounts in China have significantly decreased to a range of $15–$30, down from last week’s five-year highs. In November, China’s net gold imports through Hong Kong experienced a remarkable increase of 101.5% month-on-month, reaching 16.16 tonnes, which underscores a resurgence in buying interest. Central bank demand exhibited resilience, as the PBoC continued its purchasing trend for 13 consecutive months, while global central banks accumulated an additional 53 tonnes in October.
From a technical perspective, the market is experiencing renewed selling pressure, evidenced by an 8% increase in open interest to 16,019, coinciding with a price decline of Rs 4,931. Support is identified at Rs 132,675, beneath which prices could potentially approach Rs 130,415. Resistance is positioned at Rs 138,820, and an upward movement beyond this level may catalyze a recovery towards Rs 142,705.