Gold increased by 0.21% to close at Rs 1,50,289, as markets responded with caution to escalating geopolitical tensions related to U.S. President Donald Trump’s ultimatum to Iran. As the situation escalated with reports of explosions in significant Iranian sites and warnings of broader retaliation, the potential for gold’s appreciation appeared constrained. The metal continues to trade approximately 12% beneath its pre-conflict levels, following its most significant monthly decline since 2008 in March.
The appreciation of the U.S. dollar, coupled with evolving anticipations regarding Federal Reserve policy, persistently exerts downward pressure on gold prices. Strong U.S. economic indicators, such as improved nonfarm payroll figures and a declining unemployment rate, have prompted traders to significantly dismiss the possibility of rate cuts in the current year.
This has diminished gold’s attractiveness as an asset that does not generate yield. Nonetheless, there is a notable emergence of support stemming from physical demand, especially in India, where gold has been trading at a premium after a two-month hiatus. Meanwhile, demand in China has remained stable, even in the face of slightly reduced premiums. On the institutional side, the People’s Bank of China maintained its gold accumulation, marking its 17th consecutive month of purchases, underscoring persistent long-term demand from central banks worldwide.
The market is currently experiencing short covering, evidenced by a decline in open interest alongside rising prices. Immediate support is identified at Rs 1,48,860, with potential further decline towards Rs 1,47,425. Resistance is established at Rs 1,51,295, and a breakout beyond this level may propel prices towards Rs 1,52,295.