Gold settled 0.51% lower at Rs. 146,519 as elevated oil prices intensified inflation concerns, bolstering expectations of tighter monetary policy, while a stronger US dollar and rising bond yields exerted additional pressure. Ongoing conflicts in the Middle East and Eastern Europe, coupled with Iran’s sustained dominance over the Strait of Hormuz, have contributed to the persistence of high oil prices. Markets anticipate that the US Federal Reserve will maintain interest rates at their current levels in the upcoming week, while assigning an estimated 94% likelihood to a rate increase in December.
Fed Chair Warsh did not indicate the outcome of the forthcoming FOMC meeting, stating that stronger-than-anticipated inflation had not changed his economic evaluation, even as traders lowered their expectations for an October rate increase. The European Central Bank is anticipated to implement a minimum of one further 25-basis-point rate hike this year, whereas Bank of Japan Governor Kazuo Ueda has suggested that core inflation is nearing the 2% target, thereby allowing for potential additional tightening measures. Data from the CFTC for the week ending October 13 reveals a decrease in COMEX gold speculative net long positions, which fell by 3,741 contracts to a total of 111,079. This shift suggests a reduction in bullish sentiment among traders.
Physical demand exhibited varied trends, with Indian gold premiums rising to approximately $7 per ounce as reduced prices stimulated jewellery purchases, in contrast to previous discounts reaching up to $6. However, India’s gold imports in September fell sharply to $1.8 billion, a significant decrease from $9.6 billion in the same month last year. Chinese bullion premiums fluctuated between $4 and $13 per ounce, whereas investment demand in Japan continued to exhibit weakness. China’s central bank has prolonged its gold acquisition for 23 consecutive months, raising its holdings to 77.47 million fine troy ounces in September, up from 76.73 million ounces. At the end of September, London vaults contained 9,821 tonnes of gold, reflecting a month-on-month increase of 1.96%.
Goldman Sachs upheld its end-2027 gold projection at $5,400 per ounce, attributing this to ongoing central bank diversification. However, a more hawkish Federal Reserve might instigate a correction toward $4,070, followed by a rebound to $4,200 by the end of 2026. Gold is currently experiencing renewed selling pressure, evidenced by a 0.42% rise in open interest to 16,829 contracts, coupled with a decline in prices of Rs. 747. Support is positioned at Rs. 145,750, with an additional level at Rs. 144,980. Resistance is identified at Rs. 147,320, beyond which prices may approach Rs. 148,120.
