Due to heightened demand for safe-haven assets and the dovish outlook from the Federal Reserve, gold prices concluded yesterday at Rs 118113, reflecting a 0.45% increase from the prior closing price. The ongoing partial shutdown of the United States government is jeopardizing employment and postponing critical economic indicators, including the non-farm payrolls report, thereby heightening investor interest in bullion. In light of ongoing inflationary pressures, the disappointing private labor data has bolstered expectations for two further rate reductions by the Federal Reserve within the current year.
On the international front, the People’s Bank of China has sustained its gold acquisitions for the tenth consecutive month, underscoring the demand from central banks. Conversely, China’s net gold imports via Hong Kong experienced a decline of 39.11% in August. This decline reflects the diminished wholesale demand that arose as investors shifted their attention to equity markets. Notwithstanding this, an increase in imports is expected as we approach the end of September. The demand for physical gold in India has risen, even in the context of historically high prices. This occurred because festive buying spurred purchases, with dealers imposing premiums as high as $9 per ounce above local rates.
In September, imports of gold and silver experienced a significant increase, nearly doubling in comparison to the figures recorded in August, the most recent month for which data was available. Swiss customs statistics indicate that exports to China surged by 254% in August, totaling 35 tons. Furthermore, there was an uptick in supplies to India, which partially offset a notable decline in shipments to the United States.
The market is experiencing renewed buying activity, as indicated by a 0.61% rise in open interest to 15,587, alongside a price increase of Rs 525. The price of gold is presently encountering support near Rs 117145, and a decline beneath this threshold could result in a challenge at Rs 116180. Conversely, resistance is positioned at Rs 118710, and a breach of this level would pave the way to Rs 119310.