Insights 
VT 
Gold prices in India decreased on Tuesday, with the price per gram dropping to 12,277.96 Indian Rupees (INR) from 12,317.33 INR the previous day. Prices per tola also fell from 143,662.20 INR to 143,207.70 INR.
Factors contributing to this include a modest increase in the US Dollar and easing US-China trade tensions, both of which apply downward pressure on Gold prices. The anticipation of a 25-basis-point rate cut by the US Federal Reserve could limit sharp decreases in the price.
Geopolitical Tensions Impact
The ongoing US government shutdown and geopolitical tensions, particularly involving Russia and Ukraine, maintain some support for Gold as a safe-haven asset. Traders are also awaiting the release of US consumer inflation figures, which could impact future price dynamics.
Central banks are significant purchasers of Gold, with emerging economies like China and India increasing their reserves. Gold generally has an inverse relationship with the US Dollar and risk assets, increasing in price when these decline.
International prices are converted to local currency and units for reference, though there may be slight differences depending on local conditions. These prices, derived from international market rates, show market sentiments driving Gold’s valuation.
We are seeing gold prices dip today, which is mostly a reaction to the US Dollar showing strength again. The Dollar Index (DXY) is hovering near 107 as the market anticipates the Federal Reserve will maintain its hawkish stance on interest rates. This makes holding a non-yielding asset like gold more expensive for traders.
This situation feels different from what we saw back in late 2023, when markets had almost fully priced in multiple Fed rate cuts. Looking back, those cuts did happen in 2024 but were quickly followed by rate hikes to combat the inflation resurgence later that year. That memory is now keeping traders from aggressively betting against the dollar, which puts a cap on any significant gold rally for now.
Central Bank Demand and Market Strategy
Geopolitical risks are still providing a floor for gold prices, preventing a major sell-off. We are still monitoring the unresolved tensions on the Russia-Ukraine border, which serve as a constant reminder of gold’s role as a safe-haven asset. Much like the events leading up to 2024, any escalation there could trigger a quick flight to safety and push gold higher.
We also cannot ignore the steady demand from central banks, which continues to be a major supporting factor in the background. We remember the record 1,136 tonnes they bought in 2022, and reports from the World Gold Council confirm this trend continued through 2024 and the first half of 2025. This long-term strategic buying from large institutions provides strong underlying support for the market.
Unlike the period from 2018 to 2020, when gold prices reacted heavily to US-China trade headlines, the market’s focus has shifted. While global trade is still a factor, the immediate risk sentiment is now more tied to sovereign debt concerns and regional conflicts. However, the basic principle holds that an unstable global economic picture is ultimately good for gold.
Given the strong dollar pressure against the backdrop of geopolitical support, we expect volatility to increase in the coming weeks. For derivative traders, this environment is well-suited for strategies like straddles or strangles, which can profit from a large price move in either direction. All eyes will be on the upcoming US inflation data and the language from the next FOMC meeting, which will be the primary drivers of gold’s next move.
