Gold prices in India on Thursday remained stable at 11,526.15 INR per gram, compared to Wednesday’s price of 11,535.21 INR. The price per tola slightly decreased to 134,438.20 INR from the previous day’s 134,544.40 INR.

Global Developments and Their Impact

Gold’s stability follows global developments, such as the announcement of a peace plan by US leaders, leading to a reduction in geopolitical tensions. The Federal Reserve’s meeting minutes suggest potential interest rate cuts. Market probability for a 25-basis-point rate cut in October and December are 93% and 79% respectively.

Currently, the US government is in the ninth day of a shutdown, impacting the US Dollar and influencing gold prices. Russia has heightened geopolitical concerns by threatening action against missile deployments, which affects gold market dynamics.

Traders anticipate remarks from the Federal Reserve Chair for future rate-cut guidance, affecting the USD and gold pairings. Gold prices, calculated by adapting international prices to local units, are updated daily and may vary slightly from local rates. Central banks remain major gold purchasers, increasing their reserves significantly in 2022. Gold displays inverse correlations with the USD and risk assets, reacting to geopolitical and economic conditions.

Gold prices are holding steady for now, which presents a complex picture for us. The current stability mirrors the market’s indecision, caught between easing geopolitical tensions and growing economic concerns. This deadlock suggests that traders should prepare for a significant move rather than expect this sideways trend to last.

Potential Risks and Strategies

We are seeing some profit-taking due to a fragile ceasefire agreement reached in Eastern Europe, which has temporarily calmed fears of a wider conflict. This reminds us of similar situations in the past, such as the market reaction to the Gaza peace plan talks during the Trump administration, where positive geopolitical news caused short-term dips in safe-haven assets. However, this calm feels temporary and any breakdown in talks could send gold higher again.

The main driver supporting gold is the Federal Reserve’s recent pivot. After pausing rate hikes last month, the market is now aggressively pricing in future cuts, with the CME FedWatch Tool showing a 65% probability of a rate reduction in the first quarter of 2026. Lower interest rates typically weaken the US Dollar and decrease the opportunity cost of holding non-yielding gold.

Adding to the dollar’s weakness is another potential US government shutdown, with budget negotiations stalled ahead of the holiday season. We saw how the extended shutdown in late 2023 provided a solid floor for gold prices, and a repeat of that scenario would act as a strong tailwind for the metal. These domestic issues are creating risks for the US labor market, which the Fed is watching closely.

Given these conflicting signals, outright futures positions carry significant risk. A more prudent strategy would be to use options to position for a rise in volatility; implied volatility on gold options has already risen to 18% from 15% last month. Buying long-dated call options allows us to capture potential upside from future Fed rate cuts while limiting our downside risk if geopolitical tensions ease further.

Underneath all this short-term noise, the long-term trend of central bank buying continues to provide strong support. The World Gold Council’s Q3 2025 report confirmed that central banks, led by those in Asia, added another 250 tonnes to their reserves. This consistent demand suggests that any significant price dips will likely be viewed as buying opportunities by major institutions.

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