On Thursday, gold futures experienced an upward movement, diverging from global trends and supported by investor positioning in anticipation of crucial U.S. inflation data. On the Multi Commodity Exchange, December gold futures increased by Rs 892, reflecting a 0.73% rise, bringing the price to Rs 1,22,749 per 10 grams. In the realm of international trade, however, gold prices experienced a decline, influenced by the appreciation of the U.S. dollar as market participants anticipated new insights regarding the interest rate trajectory ahead of the forthcoming U.S. Consumer Price Index report, scheduled for release later this week. Spot gold experienced a decline of 0.3%, settling at $4,082.95 per ounce, whereas U.S. December gold futures saw an increase of 0.8%, reaching $4,097.40 per ounce. The U.S. dollar index increased by 0.1%, resulting in higher costs for gold for holders of alternative currencies and subsequently reducing demand.
The financial markets appear to have almost completely incorporated a 25-basis-point reduction in interest rates by the U.S. Federal Reserve at its forthcoming meeting. Lower interest rates generally benefit gold, as they diminish the opportunity cost associated with holding a non-yielding asset. Despite the recent dip, gold prices have surged around 56% this year, reaching a record $4,381.21 per ounce on Monday, propelled by geopolitical tensions, expectations of monetary easing, and sustained central bank purchases. Analysts note that while the dollar’s short-term strength is limiting upside momentum, the overall trend remains supported by macroeconomic uncertainty and the likelihood of easing monetary conditions.
Geopolitical developments continue to influence sentiment in the precious metals market. U.S. President Donald Trump has indicated plans to address China’s oil acquisitions from Russia during his forthcoming meeting with Chinese President Xi Jinping, scheduled to take place in South Korea next week. Concurrently, reports suggest that Russia is making preparations for a potential summit involving President Vladimir Putin and Trump, signaling ongoing geopolitical realignments that could affect commodity markets. Such developments have maintained gold’s appeal as a hedge against uncertainty, even amid short-term profit-taking.
On the ETF front, holdings in the SPDR Gold Trust — the world’s largest gold-backed exchange-traded fund — decreased by 0.59% to 1,052.37 metric tons on Wednesday, down from 1,058.66 tons the prior day. The decline reflects some profit-booking among institutional investors following gold’s recent record highs. Nonetheless, sustained demand from central banks and retail investors continues to underpin long-term bullish sentiment, with traders closely monitoring upcoming U.S. inflation data and the Federal Reserve’s policy guidance for cues on the next directional move.