Gold rates steady after recent rally: Key drivers and price trends

Gold prices held steady below the $4,000 an ounce mark on Friday (October 10), with spot gold at $3,971.43 per ounce and US December futures at $3,985.80 an ounce. The metal is on track for its eighth consecutive weekly gain, supported by geopolitical uncertainty, expectations of further US rate cuts, and sustained investor demand for safe-haven assets.

In India, gold prices corrected sharply: 10 grams fell by ₹1,860 to ₹1.22 lakh per 10 grams. Smaller denominations also declined, with 8-gram and 1-gram rates slipping to ₹97,832 and ₹12,229, respectively.

Drivers behind gold’s performance

Analysts point to easing tensions in the Middle East, a stronger US dollar, and profit-booking by investors as key short-term factors affecting gold.

Darshan Desai, CEO of Aspect Bullion & Refinery, highlighted that while the metal has experienced a dip, lingering risks—including US government shutdown concerns, Federal Reserve independence, and recession fears—continue to underpin demand.

Matt Simpson, senior analyst at City Index, observed that options markets show rising volatility and downside protection, indicating limited pullback and potential buying opportunities.

Geopolitical and economic factors

The recent ceasefire agreement between Israel and Hamas has reduced immediate geopolitical risks, while US monetary policy remains central to gold’s outlook. The Federal Reserve cut rates by 25 basis points in September, with additional cuts expected in October and December.

Analysts at ANZ suggest that slowing economic growth, inflation pressures, and central bank purchases will sustain investment demand for gold.

Investment implications

Gold continues to serve as a hedge against inflation, currency volatility, and market uncertainty. Even as it rises alongside equities and cryptocurrencies due to rate-cut expectations and a weaker dollar, retail demand and ETF inflows contribute to price support.

Rhona O’Connell of StoneX noted that gold can act as a risk mitigator when equities surge, while Mark Ellis of Nutshell Asset Management emphasized the role of global policy shifts in maintaining gold demand.

Outlook

While short-term volatility may persist, analysts expect gold to retain its appeal as a safe-haven investment. Pullbacks could attract buyers, and ongoing geopolitical and economic uncertainties are likely to support the metal in the near term.

-With Reuters inputs