Gold prices in India increased on Wednesday, with a gram costing 11,880.98 Indian Rupees (INR), up from 11,759.03 INR the previous day. The price per tola rose from 137,155.00 INR to 138,577.50 INR.

Fed Chairman Powell’s comments have supported gold prices, noting no significant changes in the outlook for employment and inflation since the last meeting. He acknowledged rising risks in the labour market and inflationary pressures.

Upcoming Consumer Price Inflation Update

An update on consumer price inflation is due on October 24, with the release of the latest Consumer Price Index report by the Bureau of Labor Statistics. The NFIB Business Optimism Index fell by 2 points to 98.8 last month, indicating ongoing economic uncertainty.

Gold prices benefit from a weaker US dollar, with the US Dollar Index (DXY) dropping by 0.25% to 99.00 and the US 10-year Treasury yield falling by three basis points to 4.029%. US real yields also declined.

Gold is seen as a safe-haven asset, its price often rising amid geopolitical instability or recession fears. In 2022, central banks added 1,136 tonnes of gold, roughly $70 billion, to their reserves.

Gold’s performance is influenced by its inverse correlation with the US dollar and US Treasuries, economic conditions, and central bank policies.

We are interpreting the recent dovish remarks from the Federal Reserve as a signal that interest rate hikes may be paused. The market is now pricing in a greater chance that the Fed will hold rates steady at its next meeting, which is creating upward pressure on gold. This sentiment follows a pattern we observed in late 2023 when a similar Fed pivot caused a significant rally in bullion.

The simultaneous drop in the US Dollar Index to 99.00 and the 10-year Treasury yield to 4.029% provides a strong tailwind for gold. A weaker dollar makes gold more affordable for international buyers, while lower yields decrease the opportunity cost of holding a non-interest-bearing asset. These are classic indicators that have historically preceded a rise in gold prices.

Key Event for Gold Prices

The key event we are watching is the Consumer Price Index (CPI) report on October 24th. A surprisingly high inflation reading could erase the current dovish sentiment and cause a sharp reversal in gold’s recent gains. Therefore, any bullish positions should be hedged against this significant event risk.

For traders looking to capitalize on the current trend, buying call options on major gold ETFs with November expiration dates seems prudent. This allows capturing potential upside while navigating the volatility expected from the upcoming CPI release. The elevated implied volatility also makes selling out-of-the-money puts an attractive strategy for those who believe prices will remain stable or rise.

Beyond the Fed’s actions, we must recognize the foundational support from strong central bank buying, a trend that has continued from the record purchases in 2022 through 2025. Reports from the World Gold Council for Q3 2025 are expected to confirm that global central banks remained net buyers, adding hundreds of tonnes to their reserves. This consistent demand, along with ongoing geopolitical uncertainty, provides a solid floor for gold prices.

Create your live VT Markets account and start trading now.