Gold prices experienced a decline in the previous session, closing 0.94% lower at Rs 160,271, influenced by a stronger U.S. Dollar Index and increasing bond yields that exerted pressure on bullion. The dollar held near its peak for the year, as the benchmark 10-year U.S. Treasury yield rose to a five-week high, diminishing the attractiveness of non-yielding assets such as gold. This pressure countered the safe-haven demand that had arisen in response to the intensifying conflict involving the United States, Israel, and Iran.
On the economic front, inflation data from the United States indicated that the Consumer Price Index increased by 0.3% in February, aligning with expectations and surpassing January’s 0.2% rise. Annual inflation remained steady at 2.4%, prompting a cautious stance among investors regarding the Federal Reserve’s policy trajectory. Markets are currently focused on the Personal Consumption Expenditures Price Index for additional insights regarding the future direction of interest rates.
In the interim, the demand from central banks persists in providing support over the longer term. The People’s Bank of China has continued its gold purchasing trend for the 16th consecutive month, increasing its reserves to 74.22 million fine troy ounces by the end of February. China experienced a notable rise in gold imports through Hong Kong, with net shipments soaring by 68.7% month-on-month in January.
From a technical perspective, the market is experiencing new selling pressure, as indicated by a 3.6% increase in open interest to 7,824, alongside a price decline of Rs 1,518. Gold currently finds itself with immediate support at Rs 159,270, and a breach of this level could lead to a test of Rs 158,270. On the upside, resistance is observed at Rs 162,130, and a movement beyond this threshold could propel prices toward Rs 163,990.