Gold prices experienced a decline in the previous session, closing 0.93% lower at Rs 161,789, influenced by a strengthening U.S. Dollar Index, which remained near highs observed following the escalation of tensions between the United States and Iran earlier this month. The appreciation of the dollar diminished the attractiveness of bullion, as investors exercised caution in anticipation of the forthcoming U.S. Federal Reserve policy meeting. Recent economic data has also shaped sentiment. Inflation in the U.S. exhibited stability, as consumer prices increased by 2.4% year-on-year in February.

Meanwhile, core inflation, which omits food and energy costs, registered at 2.5%, marking the lowest rate since March 2021. In light of the recent moderation in inflation, market participants predominantly anticipate that the Federal Reserve will maintain the current interest rate levels. Traders are factoring in a singular potential reduction of 25 basis points, which may occur in September.

On the demand side, China remains a significant contributor to the global gold market. The People’s Bank of China has continued its gold acquisition for the 16th month in a row, culminating in total holdings of 74.22 million troy ounces as of the end of February. Moreover, China’s net gold imports via Hong Kong experienced a significant increase of 68.7% month-on-month in January, indicating robust investment demand.

From a technical perspective, the market is experiencing long liquidation, as evidenced by a 0.71% decline in open interest to 7,552, accompanied by a price drop of Rs 1,514. Gold exhibits immediate support at Rs 160,960, with a breach below this level likely to test Rs 160,135. On the upside, resistance is observed at Rs 162,880, and a movement beyond this threshold could propel prices toward Rs 163,975.