Gold prices experienced a significant decline of 2.88%, closing at Rs 138,485. This drop was influenced by increasing prices and stronger-than-anticipated US inflation data, which bolstered expectations for additional monetary tightening by the Federal Reserve. US inflation accelerated in September, heightening the prospects of a December rate hike, as markets are now pricing in nearly a 75% probability. Higher Treasury yields, a stronger dollar, and expectations of elevated interest rates have prompted analysts to revise their 2026 gold price forecast down to $4,495 per ounce from the previous estimate of $4,509.
Fed Chair Kevin Warsh indicated that inflation could return to the 2% target without significantly slowing economic growth, while Goldman Sachs maintained its bullish longer-term outlook, retaining its end-2027 forecast of $5,400 per ounce. The bank emphasised ongoing diversification by central banks and persistent purchasing activity, especially from China, as crucial structural supports. China’s net gold imports via Hong Kong rose by 28% month-on-month to 74.987 tonnes in September, marking a five-month peak, as the central bank continued its gold acquisition for the 23rd consecutive month.
However, physical demand across Asian markets remained subdued, as Indian buyers postponed purchases in anticipation of further price declines. China’s bullion premiums have decreased to 0-9 per ounce from the previous range of 9-10, indicating a decline in demand. Meanwhile, gold holdings in London vaults rose by 1.96% month-on-month, reaching 9,821 tonnes at the end of September, with a valuation of approximately $1.3 trillion.
Technically, the market is experiencing new selling pressure, evidenced by a 4.9% rise in open interest to 16,368 contracts, alongside a price decrease of Rs 4,111, suggesting the establishment of new short positions. Gold is presently encountering support at Rs 136,960, beneath which prices may challenge Rs 135,440. On the upside, resistance is positioned at Rs 141,290, and a sustained movement above this level could propel prices toward Rs 144,090.
