Gold prices yesterday settled sharply lower by 2.55% at Rs 143,991, influenced by a strong U.S. dollar as investors evaluated the policy direction under President Donald Trump’s nominee for Fed chair, Kevin Warsh. Market participants anticipate a measured stance regarding rate reductions, alongside a tendency towards maintaining a more compact Federal Reserve balance sheet.

In December, U.S. producer prices experienced their most rapid increase in five months, indicating ongoing inflationary pressures that may necessitate prolonged elevated interest rates. Sentiment was further dampened following the announcement from CME Group regarding an increase in margins for COMEX gold futures, with 1-oz contract margins rising from 6% to 8%. Notwithstanding the correction, the underlying demand indicators continue to exhibit a positive outlook. Gold holdings in London vaults increased by 2.24% month-on-month, reaching 9,106 tons.

Meanwhile, Poland has established itself as the largest official gold buyer globally for the second consecutive year in 2025, acquiring an additional 102 tons. In December, Swiss gold exports experienced a notable increase of 27%, with shipments to the UK reaching their highest level since 2019. Conversely, deliveries to China plummeted to zero, coinciding with record price levels. Investment demand in Asia exhibited robust strength, as evidenced by a significant increase in premiums in both India and China. China’s central bank has prolonged its gold acquisition for 14 consecutive months, underscoring the significance of official-sector demand as a crucial element of long-term support.

From a technical perspective, the market is experiencing long liquidation, as evidenced by a 1.14% decrease in open interest to 8,518, coupled with a significant price drop of Rs 3,762. Support is identified at Rs 137,070, beneath which prices could potentially decline to Rs 130,155. Conversely, resistance is established at Rs 150,895, and a breakout above this level may lead to a target of Rs 157,805.