Gold prices in India on Thursday held steady at 11,526.15 INR per gram, compared to Wednesday’s price of 11,535.21 INR. The price per tola slightly dropped to 134,438.20 INR from the previous day’s 134,544.40 INR.

Global Developments and Their Impact

Gold prices remained stable due to recent global events. The US announced a peace plan that eased geopolitical tensions. Minutes from the Federal Reserve’s meeting hinted at possible interest rate cuts, with a 93% chance of a 25-basis-point cut in October and 79% in December. The US government is now in its ninth day of a shutdown, affecting the US Dollar and gold prices. Russia’s threats regarding missile deployments have raised geopolitical concerns, impacting the gold market. Traders are awaiting comments from the Federal Reserve Chair, which could influence the USD and gold prices. Gold prices are adjusted daily based on international rates and may vary slightly locally. Central banks are significant gold buyers, increasing reserves notably in 2022. Gold typically moves inversely to the USD and risk assets, responding to geopolitical and economic changes. Currently, gold prices are steady, illustrating market indecision between easing tensions and economic worries. This deadlock suggests traders should be ready for a significant shift rather than expect continued stability.

Potential Risks and Strategies

Profit-taking is occurring due to a fragile ceasefire agreement in Eastern Europe, easing fears of wider conflict. This situation is reminiscent of past market reactions, like those during the Gaza peace plan talks under Trump, where positive geopolitical news led to short-term drops in safe-haven assets. However, this calm may not last, and any breakdown in talks could push gold prices higher. The Federal Reserve’s recent shift is a key factor supporting gold. After pausing rate hikes last month, the market is now factoring in future cuts, with a 65% chance of a reduction by the first quarter of 2026. Lower interest rates tend to weaken the US Dollar, making gold more attractive. An impending US government shutdown and stalled budget negotiations before the holiday season further weaken the dollar. The last shutdown in late 2023 provided strong support for gold prices, and a repeat could benefit the metal. These domestic issues pose risks for the US labor market, which the Fed is monitoring closely. Given these mixed signals, outright futures positions are risky. A safer strategy is to use options to prepare for increased volatility; implied volatility for gold options has risen to 18% from 15% last month. Buying long-term call options allows for potential gains from future Fed rate cuts while limiting downside risk if geopolitical tensions ease. Amid all this short-term uncertainty, the long-term trend of central bank buying offers solid support. The World Gold Council’s Q3 2025 report showed that central banks, especially in Asia, added another 250 tonnes to their reserves. This steady demand indicates that significant price drops will likely be seen as buying opportunities by major institutions. Create your live VT Markets account and start trading now.

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