Gold prices experienced a significant increase, with the market closing up by 5.7% at Rs 162186, influenced by a mix of domestic policy adjustments, rising geopolitical tensions, and ongoing inflation worries. The most significant catalyst occurred when India raised import tariffs on gold from 6% to 15%, with the objective of limiting imports and alleviating strain on the nation’s foreign exchange reserves. The updated framework incorporates a 10% basic customs duty in conjunction with a 5% Agriculture Infrastructure and Development Cess, thereby substantially increasing the landed cost of gold.
Although this action may exert pressure on immediate physical demand, it is anticipated to bolster the rupee and reduce the trade deficit. Global safe-haven demand also strengthened after US President Donald Trump characterized the US-Iran ceasefire as being on “massive life support,” heightening concerns over potential disruptions in the Middle East and ongoing uncertainty surrounding the Strait of Hormuz. Simultaneously, heightened inflation figures in the US, with headline inflation increasing to 3.8% and core inflation at 2.8%, bolstered anticipations that the Federal Reserve may maintain elevated interest rates for an extended period.
Prominent brokerages such as BofA Global Research and Goldman Sachs have revised their projections regarding the timing of future rate cuts. Investment demand for gold persisted strongly, even in the face of declining jewellery purchases. The World Gold Council reports that India’s gold ETF inflows experienced a remarkable increase of 186% year-on-year in the March quarter, with investment demand surpassing jewellery consumption for the first time in history. On a global scale, the purchasing activities of central banks, coupled with robust demand for bars and coins, have sustained price levels.
From a technical perspective, the market is experiencing short covering, evidenced by a 12.2% decline in open interest, which has settled at 8367, while prices have increased by Rs 8744. Gold currently finds support at Rs 156,525, with additional downside support positioned at Rs 150,865. On the upside, resistance is observed at Rs 166170, and a breakout above this level could propel prices towards Rs 170155.