US gold futures also gained 0.5% to $2,627.60 per ounce.
In India, gold prices reflected this uptrend, with 24-carat gold priced at ₹76,320 per 10 grams and 22-carat gold, commonly used in jewelry, at ₹69,960 per 10 grams.
Factors driving gold’s rally
Softer US dollar
The US dollar weakened as traders booked profits after last week’s rally.
A softer dollar makes gold cheaper for buyers using other currencies, boosting demand.
“Recent market movements are largely technical, influenced by an overbought US dollar,” noted Kyle Rodda, financial market analyst at Capital.com.
Geopolitical uncertainty
Russia’s largest air strike on Ukraine in months heightened geopolitical tensions, further lifting gold prices.
Non-yielding assets like gold tend to perform well during periods of uncertainty.
Rahul Kalantri, VP Commodities at Mehta Equities Ltd., highlighted, “Russia’s strikes on Ukrainian power facilities and President Biden’s approval of Ukraine’s use of U.S.-supplied missiles added to the uncertainty.”
Interest rate speculation
Traders are keenly awaiting cues from Federal Reserve officials this week regarding the December interest rate decision.
Current odds of a 25-basis-point rate cut stand at 58.8%.
Lower interest rates reduce the opportunity cost of holding gold, making it an attractive investment.
Price levels
Rahul Kalantri pointed out key technical levels for gold:
- Support: $2,593–$2,578 per ounce (₹74,880–₹74,750 per 10 grams)
- Resistance: $2,628–$2,642 per ounce (₹75,310–₹75,540 per 10 grams)
He added that Goldman Sachs projects gold prices to reach $3,000 per ounce by December 2025, though delays in Fed rate cuts could temper gains.
Renisha Chainani, Head of Research at Augmont, shared a positive outlook, saying, “Renewed geopolitical tensions will push gold prices higher. We expect a rebound towards ₹75,000–₹77,000 per 10 grams in the near term.”
Investment outlook
Gold continues to be a preferred asset during times of market volatility and geopolitical uncertainty.
With the potential for further geopolitical flare-ups and a dovish Fed stance, analysts anticipate robust demand for the metal.
Investors looking to diversify their portfolios may consider gold as a hedge against inflation and currency fluctuations.
However, market participants should monitor interest rate decisions and geopolitical developments closely.
