Gold prices experienced a significant decline of 3.01%, closing at Rs 1,47,753 as traders took profits in the wake of the announcement of Kevin Warsh as the next nominee for U.S. Federal Reserve Chair, alongside stronger-than-anticipated U.S. producer price data that bolstered the dollar and exerted pressure on bullion.

The Federal Reserve’s most recent economic forecast has tempered anticipations for imminent rate reductions following three successive cuts in late 2025. In December, the U.S. Producer Price Index increased by 0.5% month-on-month, marking the most rapid growth in three months. This development heightens apprehensions regarding persistent inflation and the likelihood of an extended period of elevated interest rates. Notwithstanding the short-term adjustment, the underlying support for gold continues to be robust. The ongoing purchasing activities of the central bank remain a fundamental component, as Poland plans to acquire 102 tons in 2025, with a long-term objective of increasing its reserves to 700 tons.

China has prolonged its gold acquisition for 14 consecutive months, highlighting the official demand as a safeguard against the risks associated with the dollar. Holdings in London vaults increased by 2.24% in December, reflecting ongoing investor interest. Physical market indicators exhibit resilience, as India and China experience heightened premiums driven by substantial investment and jewellery demand. The longer-term outlook appears favorable, as Deutsche Bank anticipates that gold may attain $6,000 per ounce by 2026 in a scenario characterized by a weak dollar.

From a technical perspective, the market is experiencing long liquidation, evidenced by a significant decline in open interest of 26.31%. Support is identified at Rs 1,40,390, beneath which prices could potentially approach Rs 1,33,025. Resistance stands at Rs 1,53,365, and a breakout may pave the way to Rs 1,58,975.