Gold settled 0.29% higher at Rs 147,918, buoyed by a weaker dollar as investors evaluated the US Federal Reserve’s monetary policy outlook. Fed Chair Warsh did not indicate the outcome of the forthcoming FOMC meeting, while asserting that stronger-than-anticipated inflation had not altered his evaluation of the US economy. Traders predominantly anticipate that rates will stay the same this month, while incorporating a 91% likelihood of an increase in December, as indicated by the CME FedWatch Tool.
In September, US producer prices experienced their most significant rise in four and a half years, coinciding with a surge in consumer inflation, underscoring the expansion of price pressures across the economy. Meanwhile, a number of Indian mutual funds have halted bulk subscriptions to gold ETF fund of funds. Gold traded at a premium of up to $7 per ounce in India, reversing discounts of up to $6 from the previous week, as lower prices stimulated jewellery demand. However, India’s gold imports fell to $1.8 billion in September, a significant decrease from $9.6 billion in the same month the previous year.
China’s central bank has continued its gold purchasing trend for 23 consecutive months, raising its holdings to 77.47 million fine troy ounces at the close of September, up from 76.73 million ounces in August. However, the value of its gold reserves has decreased to $323.52 billion, down from $350.08 billion. Gold holdings in London vaults experienced a month-on-month increase of 1.96%, reaching a total of 9,821 tonnes. Goldman Sachs has upheld its end-2027 gold price forecast at $5,400 per ounce, attributing this to ongoing central bank diversification as a significant structural factor.
However, it cautions that a more hawkish Federal Reserve might lead to a correction toward $4,070, followed by a rebound to $4,200 by the end of 2026. Gold is currently experiencing short covering, as evidenced by a 2.15% decline in open interest to 16,717 contracts, alongside a price increase of Rs 429. Support is established at Rs 147,350, with an additional level at Rs 146,780, whereas resistance is identified at Rs 148,660. A sustained move above this resistance could push prices toward Rs 149,400.
