Gold settled 0.27% higher at Rs. 1,42,552 on Thursday in a light trading session due to Diwali, recovering on short covering after recent losses driven by rising oil prices, inflation concerns, and expectations of tighter monetary policy. Federal Reserve officials Beth Hammack and Thomas Barkin endorsed additional gradual interest rate hikes, referencing ongoing inflation exceeding the 2% target and a robust labour market. Markets currently reflect a 68% probability of a December rate hike. Goldman Sachs has revised its end-2026 gold forecast downward to $4,150 per ounce, a decrease from the previous estimate of $4,650.
In contrast, Citi continues to hold a positive outlook, setting targets of $4,500 for three months and $5,000 for a six to twelve-month horizon, contingent upon a reduction in geopolitical tensions. According to the World Gold Council, global gold ETFs attracted $2.7 billion in October, resulting in an increase of holdings by 19 tonnes to 4,275 tonnes, even as assets under management experienced a 6% decline to $542 billion. Central bank purchases increased by 42% year-on-year, totalling 321 tonnes in the third quarter. Year-to-date purchases have reached 675 tonnes, leading the WGC to anticipate that buying in 2026 will match or surpass the 2025 levels of 848 tonnes.
China increased its gold reserves by 103.26 tonnes in the first nine months, bringing its total holdings to 2,409.59 tonnes. Global bar and coin demand experienced a year-on-year decline of 19%, totalling 268 tonnes, while jewellery consumption saw a reduction of 17%, amounting to 313 tonnes. India’s gold demand is anticipated to fall to approximately 650 tonnes by 2026, marking the lowest level since 2020. This decline is attributed to high prices, increasing living costs, and a weakening rural economy, all of which are exerting pressure on consumption.
Nevertheless, physical buying showed signs of improvement across Asian markets in anticipation of Diwali, as reduced prices stimulated retail purchases. Technically, the market is experiencing short covering, as open interest has decreased by 0.41% to 15,706 contracts, accompanied by a price increase of Rs. 385. Gold is currently finding support at Rs. 1,42,240, followed by Rs. 1,41,930, while resistance is placed at Rs. 1,42,780. A sustained move above this resistance could extend the recovery towards Rs. 1,43,010.
