Gold settled 1.23% higher at Rs. 1,40,186 per 10 grams, supported by a decline in prices that eased inflation concerns, while investors focused on the upcoming US midterm elections and their potential implications for fiscal policy. However, the upside remained limited as persistent inflationary pressures strengthened expectations of further Federal Reserve tightening. US inflation accelerated in September, while three Fed officials supported additional rate increases, reinforcing market expectations of a 75% probability of a December rate hike.
In Europe, inflation is also expected to remain elevated, potentially returning to the ECB’s 2% target only in 2028. Physical gold demand across key Asian markets remained subdued, with Indian buyers postponing purchases amid expectations of lower prices and Chinese demand remaining muted. Indian gold premiums declined to $7 per ounce from $9 previously, while Chinese premiums narrowed to 0-9 per ounce.
Meanwhile, China’s net gold imports through Hong Kong increased 28% month-on-month to 74.987 tonnes in September, the highest in five months, while its central bank extended gold purchases for a 23rd consecutive month. Gold holdings in London vaults rose 1.96% month-on-month to 9,821 tonnes at the end of September. Goldman Sachs maintained its end-2027 gold price forecast at $5,400 per ounce, citing sustained central bank diversification as a key structural support, although it warned that aggressive Fed tightening could trigger a correction towards $4,070 before a recovery.
Technically, the market is witnessing short covering, as open interest declined 1.38% to 16,142 contracts while prices advanced by Rs. 1,701. Gold is currently finding support at Rs. 1,38,640, followed by Rs. 1,37,090, while resistance is placed at Rs. 1,41,130. A sustained move above this resistance could extend the recovery towards Rs. 1,42,070, whereas a break below immediate support may invite further selling pressure
