Gold price rises by Rs 8,200 in 10 days. Can it reach the target of Rs 1.55 lakh?

Indian gold prices have rebounded sharply in recent days, tracking gains in global precious metals markets amid rising optimism over a possible solution to the US government shutdown. In just ten days, domestic gold prices have risen by nearly 7% or Rs 8,200 from the recent low of Rs 1,17,628 per 10 gram (recorded on October 28) to a three-week high of Rs 1,25,839, resuming an uptrend that was paused after Diwali.This recovery coincides with growing expectations that the prolonged 40-day US federal shutdown will soon be resolved.

According to Renisha Chainani, head of research at Augmont, “Gold and silver are both breaking their consolidation ranges at $49 and $4,050 respectively, hitting a two-week high as concerns about the US economy grow.”The U.S. Senate recently approved a bill to reopen the federal government by a 60-40 vote, a move seen as an important step toward ending the shutdown. “The decision opens the door for an end to the shutdown this week, even if there are still obstacles to overcome,” Dr. Chainani noted.

Markets are also factoring in the possibility of a lower rate from the US Federal Reserve in December, with traders currently estimating a 67% chance of a quarter-point cut. This has contributed to bullish sentiment for precious metals, which typically benefit from lower interest rates.

In the domestic context, gold has now risen above Rs 1,22,000, breaking the previous consolidation. “The next target to look for resistance is $4,150 (~Rs 1,24,500),” Dr Chainani said, adding that the next upside target could be around Rs 1,55,000. Ross Maxwell, Global Strategy Lead at VT Markets, offered a broader view, noting that while “an end to uncertainty would strengthen the USD and reduce demand for safe-haven gold,” prices have instead “reacted bullishly,” reflecting expectations of “continued fiscal spending, rising US debt and a weaker USD over the medium term.” For India, he said domestic gold prices are generally determined by international trends but also depend on the INR exchange rate and local demand. “A stable or slightly weaker rupee will further strengthen the rise in international gold prices,” Maxwell said.

He further explained that as India enters a period of high demand driven by the wedding and festive season, domestic sentiment is likely to remain robust. “Hence, the near-term outlook for Indian gold prices remains bullish,” he added.

Looking ahead, Maxwell said, “If the global rally continues and the rupee remains stable or weakens slightly, prices may move towards Rs 1,26,000 initially.” However, he warned that if US yields rise and the USD strengthens, a correction to Rs 1,10,000 is possible, with “strong support around Rs 1,00,000” if the downturn deepens.

On the demand side, he noted: “The immediate impact will mean stable demand from the wedding season onwards and renewed interest from investors looking to hedge against the uncertainty.” However, Maxwell also warned that “if prices remain high, it could reduce demand for jewelry if the rally continues too far.”

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In summary, while the end of the US shutdown and supportive global cues have pushed Indian gold prices to multi-week highs, analysts are closely monitoring further developments in the US economy, currency movement and seasonal demand trends to gauge how far the rally may extend.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times)