Gold Rises in India as Expectations of US Rate Hike in October Decline

Gold prices in the Indian market rose 0.91% to 150,390 rupees, adding 1,354 rupees, amidst fresh buying, according to Investing.com India citing Kedia Advisory. Open interest increased 1.52% to 15,955 contracts, with support near 149,570 rupees and resistance at 150,975 rupees.

This rise came after a weaker-than-expected US inflation reading for August, along with a downward revision of the previous month's reading, reduced the probability of an October rate hike to 37% from 45%, while December expectations remained high at 89%. The note explained that rising Treasury yields and a strong dollar capped the metal's gains.

On the outlook front, HSBC lowered its average price forecast for gold in 2026 to $4,490 per ounce from $4,560, and reduced its 2027 forecast to $4,825, citing further US rate hikes and higher oil prices. In contrast, Goldman Sachs maintained its target for the end of 2027 at $5,400, considering that monetary policy tightening might slow gains in the near term without altering the long-term outlook, explaining that central bank diversification remains a structural pillar of demand.

In the physical market, demand in key Asian markets improved as prices fell, with gold dealers in India narrowing their discounts to a maximum of $14 per ounce from $43 previously, ahead of the Dussehra and Diwali seasons. Premiums ranging between $5 and $10 were recorded in China, while prices in Singapore, Hong Kong, and Japan ranged between slight discounts and premiums.

What do these terms mean?

Open interest is the number of active contracts that have not yet been settled, and its increase signifies new money entering the market. Discount is the difference between the global gold price and the price offered by local dealers; when the discount narrows, it indicates improving local demand. Premium is an additional amount paid by the buyer above the global price to obtain the metal immediately. Dussehra and Diwali are two Indian festivals during which Indians buy gold both as a tradition and as savings.