Gold Prices Soar in India Amid Festive Demand and Global Market Uncertainty

 

Gold prices in India are experiencing a significant surge as investors react to a combination of festive demand and global market factors. In Delhi, the price of 24K gold jumped by ₹510, reaching ₹78,050 per 10 grams. Similarly, 22K gold increased by ₹470, now priced at ₹71,560 per 10 grams.

The upcoming Dhanteras and Diwali festivals are driving strong consumer demand, as gold purchases are considered auspicious during this time of year.

Globally, gold is trading near all-time highs, supported by uncertainties surrounding the U.S. elections and expectations of interest rate cuts from major central banks. As of Thursday, October 17, spot gold rose by 0.3% to $2,682.14 per ounce, while U.S. gold futures gained 0.2% to $2,697.40. This follows a high of $2,685.16 per ounce reached on Wednesday, October 16, just short of the previous record of $2,685.42 per ounce set on September 26.

Gold's appeal as a safe-haven asset is further strengthened by the current geopolitical climate. Analysts suggest that uncertainties around a potential Trump presidency could intensify trade tensions and increase the U.S. budget deficit, prompting more investors to turn to gold.

Kelvin Wong, OANDA's senior market analyst for Asia Pacific, noted that weaker-than-expected U.S. retail sales data could drive gold prices even higher.

Central banks are also playing a role in gold's upward trend. According to the CME FedWatch tool, there is a 92% probability of a 25-basis-point rate cut by the U.S. Federal Reserve next month. Meanwhile, the European Central Bank is expected to lower rates again to better manage eurozone inflation, and in the UK, a sharp decline in inflation has strengthened predictions of a rate cut by the Bank of England.

Lower interest rates generally boost gold’s appeal since bullion does not yield interest, making it an attractive asset in a low-rate environment.

Despite the upward momentum, market analysts advise caution. Renisha Chainani, Head of Research at Augmont, pointed out that gold is testing its all-time highs amidst geopolitical tensions and rate cut expectations. The recent escalation of conflict in the Middle East has also added to the uncertainty, further supporting gold investments.

However, some indicators suggest that gold prices may be overbought. Weekly and monthly Relative Strength Index (RSI) levels above 80 are often a signal of an impending price correction. Sandip Raichura, CEO of PL Broking and Distribution, warned that such technical signs have historically preceded price dips. Nonetheless, he remains optimistic about gold’s outlook and highlighted that $2,550 per ounce could serve as a potential support level for mid-term bullish positions.