Gold prices in India increased on Thursday. The price per gram rose to ₹9,388.38, up from ₹9,376.56 the day before. For larger quantities, Gold is now priced at ₹109,504.20 per tola, up from ₹109,366.40. In international terms, a troy ounce of Gold is valued at ₹292,011.40.

Middle East Conflict Impact

The ongoing conflict between Israel and Iran has now reached its seventh day, increasing tensions in the Middle East. This geopolitical instability is affecting market sentiments and gold prices. US tariffs on the pharmaceutical sector have added more uncertainty to the markets. The Federal Reserve has kept interest rates steady but has projected two rate cuts by the end of 2025. On Thursday, US banks were closed for Juneteenth, leading to lower market liquidity. Gold prices remain influenced by the US Dollar and overall market conditions. Gold is a popular safe-haven investment during times of global instability and economic uncertainty. Central banks, especially in emerging markets like China, India, and Turkey, are significant buyers.

Factors Influencing Gold Prices

Gold prices mainly depend on geopolitical events, interest rates, and the strength of the US Dollar. Unlike stocks or bonds, Gold does not yield returns, affecting its appeal in different market conditions. The small increase in domestic gold prices—from ₹9,376.56 to ₹9,388.38 per gram—might seem minor to some. However, traders understand that this change reflects ongoing demand amid cautious investor sentiment. A similar increase was noticed in per tola rates and in troy ounce values, indicating that buyers are seeking safety. This action is not just speculative; it shows how major events are shaping trading strategies. Increased regional tensions, especially from hostilities in the Middle East, are being factored into prices. As we watch this conflict, we see that it adds risk, pushing investors toward gold. These reactions are not just fleeting; history has shown that prolonged uncertainty leads to increased volatility in precious metals. Additional factors come into play due to US policy decisions. Changes in tariffs, especially in the pharmaceutical sector, create further unpredictability. This affects USD volatility, which usually has an inverse relationship with gold. More uncertainty here tends to support gold prices. The Federal Reserve’s decision to keep rates steady was expected, but the anticipation of two potential cuts by next year drew attention. Even if delayed, rate cuts can make gold a more appealing option. If interest rates are expected to drop, demand for gold may increase. While we are not currently seeing sharp price rises, the trend suggests that if rate cuts receive broader support, gold could benefit. On Thursday, market activity in the US was low due to the Juneteenth holiday, which explains the lack of significant movement in gold prices despite several influencing factors. When trading resumes, we could see more directional changes, especially if the US Dollar weakens or if macroeconomic data surprises. From our perspective, increased buying from central banks, particularly those outside the G7, is a significant long-term factor. These banks have confidence in gold’s stable value over time, which reinforces support levels below current prices. However, price movements remain sensitive to shifts in interest rate expectations and macroeconomic data from the US, which can strongly influence asset classes. Looking ahead, attention should be focused on upcoming communications from central banks and updates on geopolitical situations. If tensions in the Middle East extend or involve more parties, gold prices could strengthen. Likewise, inflation and labor reports from the US could signal a shift in rate guidance. This intersection creates trading opportunities, especially with options that allow for flexibility amid volatility. For now, short-term call spreads or protective collars may provide balance, given the current low volatility levels. It is wise to remain flexible, frequently reassess hedging strategies, and monitor 10-year yield trends as a gauge for rate sentiment. Close attention to currency movements, particularly USD/INR dynamics, is crucial as they impact hedged positions in India. Until fundamental drivers change or diminish, gold may continue to find support during dips. Staying responsive to mid-week fluctuations will allow for more effective capital positioning. Create your live VT Markets account and start trading now.

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