Gold prices increased by 0.16% to close at Rs 1,55,985, bolstered by ongoing safe-haven demand in the context of rising geopolitical tensions in the Middle East. As the conflict involving Iran extends into its third week, uncertainty has deepened, particularly following recent attacks on the UAE that heighten fears of a wider regional escalation. This context continues to provide substantial support for gold.
Nonetheless, potential upside remains limited as increasing energy prices have reignited concerns about inflation, leading markets to reassess their expectations regarding interest rate reductions. Major central banks, including the U.S. Federal Reserve, the ECB, the Bank of England, and the Bank of Japan, are anticipated to uphold a prudent approach, as investors remain attentive to policy direction.
Trends in the physical market exhibit a mixed outlook. In India, gold discounts have expanded significantly to $83 per ounce, marking the most substantial gap in nearly a decade, indicative of subdued domestic demand. Conversely, China experienced robust buying interest, as premiums increased to $20–$30 per ounce, bolstered by ongoing central bank acquisitions. China’s central bank has extended its gold-buying streak to 16 consecutive months, with additional purchases from Uzbekistan and Malaysia, underscoring consistent institutional demand.
From a technical perspective, the market is experiencing short covering, as evidenced by a 3.02% decline in open interest to 7,619 lots, accompanied by a price increase of Rs 249. Immediate support is identified at Rs 1,54,890, with a breach below possibly challenging Rs 1,53,800. On the upside, resistance is likely near Rs 1,57,325, and a move above could propel prices toward Rs 1,58,670.