Gold prices increased by 0.83%, closing at Rs 156,925, influenced by the recent U.S. inflation data and ongoing geopolitical tensions in the Middle East. The U.S. personal consumption expenditures price index increased by 3.8% year-on-year in April, aligning with market expectations and heightening apprehensions that inflation could persist at elevated levels for an extended period. Additional support for gold emerged following renewed military strikes between the U.S. and Iran, which heightened uncertainty across global financial markets. Rising crude oil prices, prompted by disruptions around the Strait of Hormuz, have exacerbated inflation concerns and bolstered expectations for sustained elevated interest rates.

Federal Reserve Governor Lisa Cook indicated that the central bank ought to sustain existing interest rates at this juncture, while also expressing a willingness to consider future rate increases should inflationary pressures stemming from tariffs, geopolitical tensions, and AI-driven investment persist. Despite elevated rate expectations, gold maintained its appeal, bolstered by robust central bank demand and safe-haven purchases in the context of global uncertainty. Goldman Sachs has notably adjusted its forecast for global central bank gold acquisitions, now anticipating an average monthly purchase of approximately 60 tonnes until 2026. This revision is attributed to ongoing reserve diversification and the prevailing geopolitical uncertainties.

JPMorgan has revised its 2026 average gold price forecast downward to $5,243 per ounce from a previous estimate of $5,708. Nevertheless, the bank anticipates that gold will near $6,000 per ounce by the end of 2026, driven by increasing demand in the latter half of the year. Physical demand trends exhibited a varied landscape across principal consuming nations. In India, gold has been trading at discounts, a consequence of elevated domestic prices and a decline in jewellery demand attributed to increased import duties.

Investment demand, however, exhibited remarkable strength, increasing by 52% year-on-year in the March quarter and exceeding jewellery demand for the first time. Technically, the market experienced short covering, evidenced by a significant decline in open interest of 32.84%, bringing it down to 3,064 lots. Gold is maintaining support levels at Rs 154,530 and Rs 152,135, with resistance identified at Rs 158,240 and subsequently at Rs 159,555.