Gold prices declined, closing 0.42% as the demand for safe-haven assets diminished and the anticipation of a forthcoming U.S. Federal Reserve rate cut weakened. Geopolitical risk premiums have diminished as U.S. President Donald Trump indicated a potential postponement of military action against Iran, in light of Tehran’s reassurances concerning protesters and indications of reduced internal unrest.
Concurrently, robust U.S. economic indicators led investors to reduce their expectations for aggressive easing, resulting in markets predominantly anticipating the initial Fed rate cut in July instead of June. This shift has maintained near-term yields that are favorable for the dollar while exerting pressure on bullion prices. Notwithstanding the recent short-term correction, the overarching fundamentals continue to exhibit a constructive outlook. Gold holdings in London vaults increased by 2.24% month-on-month, reaching a total of 9,106 tonnes, indicative of sustained institutional interest.
Major banks maintain a positive stance on the medium-term outlook. Commerzbank has revised its 2026 year-end forecast to $4,900 per ounce, whereas HSBC and UBS anticipate prices may reach $5,000 per ounce in 2026, attributing this outlook to geopolitical risks, increasing debt levels, and persistent demand from central banks. Physical demand exhibited varied trends. Indian retail purchasing exhibited a lackluster performance attributed to high price levels, as dealers provided discounts reaching $12 per ounce. Meanwhile, Chinese demand maintained a stable trajectory in anticipation of the Lunar New Year.
From a technical perspective, the market is experiencing long liquidation, evidenced by a 2.95% decline in open interest. Gold exhibits support at Rs 141,390; a decline beneath this level could lead to a test of Rs 140,255. On the upside, resistance is observed at Rs 143,490, and a breakout may propel prices toward Rs 144,455.