Gold prices fell in India, with the cost per gram dropping to 11,295.04 INR, compared to 11,351.78 INR the previous day. The price per tola also decreased from 132,404.90 INR to 131,743.10 INR.

The U.S. Dollar reached levels unseen since August, impacting XAU/USD bulls, as a ceasefire between Israel and Hamas contributed to gold’s decrease. Despite no new policies from Federal Reserve Chair Jerome Powell and ongoing inflation concerns, traders still expect the U.S. central bank to lower borrowing costs twice by year-end.

US Government Shutdown Continues

The U.S. government shutdown continues without resolution, affecting movement in funding bills. In geopolitical events, Ukraine faced a large-scale assault, maintaining geopolitical risks that counteract optimism from the Israel-Hamas agreement.

Gold often acts inversely to the U.S. Dollar and risk assets, as well as having a correlation with geopolitical and economic uncertainties. Central banks frequently purchase gold to diversify reserves, adding 1,136 tonnes in 2022, marking the largest annual purchase. Gold prices in India are calculated by FXStreet using international prices, converted to local currency, updated daily.

We’ve seen gold prices ease slightly from their recent record-setting rally, which makes sense given the US Dollar Index just touched a high of 107.50 this week, its strongest level since August. This strength in the dollar prompted some profit-taking, a natural market response after a strong upward move. It is important to view this not as a trend reversal, but as a temporary pause in a market with strong underlying support.

Despite the Federal Reserve’s cautious tone in their September minutes, the derivatives market is telling a different story. Current pricing from the CME FedWatch Tool shows a greater than 70% probability of at least one more rate cut before year-end, with a second one still on the table. This expectation of lower borrowing costs is a powerful tailwind for a non-yielding asset like gold.

Impact of the Government Shutdown

The ongoing US government shutdown, now in its second week, is creating domestic uncertainty that supports safe-haven assets. While the Israel-Hamas ceasefire deal has calmed some nerves, the escalating conflict in Ukraine means geopolitical risk remains elevated. We are also seeing credit rating agencies like Moody’s issue warnings about the potential economic impact of a prolonged shutdown, which could further boost demand for gold.

We should remember the historical context of central bank buying, which set records back in 2022. Recent data from the World Gold Council for the third quarter of 2025 shows this trend has continued, with emerging market central banks adding another 250 tonnes to their reserves. This consistent institutional demand provides a strong underlying support for the market, making significant price drops less likely.

For derivative traders, this temporary dip presents a potential opportunity to position for the next move up. The combination of expected rate cuts and persistent risk factors suggests that buying call options or establishing bull call spreads could be a prudent strategy. Given the conflicting short-term signals, volatility is likely to remain high, making options an effective tool to manage risk while maintaining upside exposure.

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