Gold settled down 0.68% at Rs 1,49,103 as a stronger dollar and renewed expectations of further Federal Reserve tightening exerted downward pressure on prices. Minutes from the September 15-16 FOMC meeting indicated that a majority of policymakers viewed an additional increase in the federal funds rate as likely appropriate by year-end, while underscoring that forthcoming decisions would continue to be contingent on data. All policymakers endorsed the 25-basis-point increase to 3.75%-4% at the September meeting, while recent remarks from San Francisco Fed President Mary Daly and Kansas City Fed President Jeff Schmid bolstered the likelihood of additional hikes.
Markets currently assign an 87% probability to a December rate increase, even as recent softer economic data has tempered expectations for an October adjustment. Geopolitical uncertainty persisted as US Vise President JD Vance indicated that Iran must achieve a significant reduction in its nuclear enrichment capacity to meet US demands and resolve the ongoing conflict. Despite the prevailing monetary pressures in the short term, structural demand continued to provide support, as LBMA delegates projected gold prices to reach $5,013 per ounce within the next year. Sales of Perth Mint gold coins and minted bars experienced a remarkable increase of 97.6% month-on-month, reaching 47,300 ounces in September. This figure also reflects a year-on-year rise of 29.3%.
Asian physical demand showed a slight uptick as reduced prices drew in buyers, with Chinese bullion trading at premiums of 5-10 per ounce. London vault holdings rose by 0.74% month-on-month, reaching 9,534 tonnes at the end of July, with a valuation of $1.2 trillion. Goldman Sachs upheld its end-2027 projection at $5,400 per ounce, attributing this to ongoing central bank diversification as the primary structural factor. However, a more hawkish Federal Reserve could lead to a temporary decline in prices, potentially reaching $4,070.
Technically, the market is experiencing new selling pressure, as open interest rose by 3.23% to 16,701, while prices fell by Rs 1,017, suggesting an increase in bearish participation. Gold has established support at Rs 1,48,035, and a persistent breach beneath this threshold may lead to a reassessment at Rs 1,46,965. On the upside, resistance is positioned at Rs 1,50,055, and a decisive move above this level could lead to an extension of gains toward Rs 1,51,005.
