Gold prices experienced an increase in the previous session, closing 1.87% higher at Rs 163,303, bolstered by a declining dollar and reduced energy prices following Donald Trump’s indication that the current conflict in the Middle East may soon reach a resolution. Despite the rally, gains were somewhat constrained as elevated energy costs persist in raising inflation concerns, which may subsequently diminish the probability of imminent interest rate reductions by the Federal Reserve.
The CME Group FedWatch tool indicates that investors predominantly anticipate the Federal Reserve will maintain its current interest rates during the policy meeting scheduled for March 18. The demand from central banks continues to serve as a significant supportive element. The People’s Bank of China has maintained its gold acquisition trend for 16 consecutive months, culminating in holdings of 74.22 million troy ounces by the conclusion of February.
In January, China’s net gold imports via Hong Kong experienced a significant increase of 68.7%, reaching 20.585 tonnes, indicative of heightened investment demand. Physical demand trends exhibited variability across different regions. In India, elevated and fluctuating prices have suppressed retail purchasing, even as discounts have diminished due to supply chain interruptions stemming from regional airspace restrictions. In contrast, demand in China exhibited resilience, with gold trading at premiums of $13–$15 per ounce above global benchmark prices.
From a technical perspective, the market is experiencing new buying activity, as evidenced by a 2.63% increase in open interest to 7,606, alongside a price increase of Rs 3,004. Gold exhibits immediate support at Rs 161,905, with additional downside risks possibly probing Rs 160,505. On the upside, resistance is observed at Rs 164,140, and a breach above this threshold could propel prices toward Rs 164,975.