Gold prices in India rose on Thursday, according to FXStreet. The price per gram went up to 11,962.75 Indian Rupees, up from 11,876.92 INR the day before. For tola, the price increased to 139,528.90 INR from 138,527.80 INR. The US federal government shutdown has now lasted three weeks, affecting the economy. A Treasury official mentioned that the shutdown could lead to a $15 billion loss in economic output every week.

Escalating Trade Tensions

Trade tensions between the U.S. and China are worsening, with both countries imposing fees this week. The U.S. is also thinking about stopping the cooking oil trade with China in response to China’s actions. The U.S. Defense Secretary warned Russia about the costs of continuing the conflict in Ukraine. President Trump is also considering sending long-range missiles to Ukraine. The Chair of the U.S. Federal Reserve hinted at a possible 25-basis-point rate cut in October and December. The falling value of the U.S. Dollar is helping to push gold prices up. With fewer major economic reports expected, speeches from FOMC members could affect the demand for the USD and the price of gold. FXStreet adjusts international prices for the local currency in India. Prices are for reference, and local rates may vary.

Safe Haven Assets Continue to Attract

Gold acts as a safe-haven asset during uncertain times. Central banks have been accumulating gold, adding 1,136 tonnes to their reserves in 2022, the largest yearly purchase on record. Given the trend towards safety, gold’s recent rise is a strong indicator for the weeks ahead. The combination of a dovish Federal Reserve and a weaker U.S. dollar is creating favorable conditions, suggesting that drops in gold prices should be seen as buying opportunities. The Federal Reserve’s recent dovish stance is currently the most important factor. After maintaining interest rates at a 23-year high for much of 2024 to combat inflation, their shift shows that economic growth is now the main focus. The market has already priced in rate cuts for the upcoming October and December meetings, suggesting upward momentum for non-yielding gold. Geopolitical tensions are also drawing attention to safe-haven assets. The intensifying U.S.-China trade disputes and rising tensions regarding the Ukraine war are pushing investors toward gold. These ongoing conflicts provide a solid base for gold prices as we approach the year’s end. The ongoing weakness of the U.S. dollar is another crucial element. The Dollar Index (DXY) has dropped for three consecutive days, and we expect this trend to continue, as traders anticipate the Fed’s rate cuts. Since gold is priced in dollars, this currency shift is now benefiting the precious metal. This growth is supported by strong demand that we’ve been monitoring for years. In 2023, central banks added a record 1,037 tonnes of gold to their reserves, following last year’s all-time high. This consistent purchasing by major global institutions boosts the case for higher prices. For derivative traders, this suggests that using call options could be a good way to capture potential gains while managing risk. Long calls on gold futures or major gold ETFs can provide leveraged exposure to continuing price increases. We might also consider VIX call options as an inexpensive way to hedge against sudden market volatility caused by geopolitical issues. Create your live VT Markets account and start trading now.

here to set up a live account on VT Markets now