Gold's Festival-Fuelled Demand Tests a Hawkish Fed Headwind
Published on 11/07/2026 at 09:21 | Editorial boerse-global.de
Indian buyers returned to the gold market as Dhanteras and Diwali festivities got under way, lured by cheaper prices. Reuters reported the pickup in demand yesterday, handing the bullion market a lift from the physical trade just as higher US yields bear down on the metal. Whether that buying appetite holds beyond the festive season is now the question for investors.
Surendra Mehta, secretary of the India Bullion and Jewellers Association, expects Dhanteras sales to come in roughly 10% higher than a year earlier, according to Reuters. The price retreat has collided with a seasonal buying occasion, making gold attractive again for Indian purchasers. That offers a counterpoint to weak global jewellery demand: the World Gold Council reported on Tuesday that worldwide jewellery demand fell 17% to 313 tonnes in the third quarter of 2026. The Indian revival therefore follows a stretch of markedly softer demand, and a broader recovery in that segment would give the market further support — provided lower prices also draw buyers outside India's festive trade.
Official-sector and fund buying are lending support on a different plane. Central banks and other official institutions bought a net 321 tonnes in the third quarter of 2026, up 42% year on year, according to the World Gold Council — the strongest quarterly total since the final quarter of 2024. The Chinese central bank extended its own run today, buying gold for a 24th consecutive month, Reuters reported.
Physically backed gold funds kept attracting money in October. Net inflows reached $2.7 billion, lifting worldwide holdings by 19 tonnes to 4,275 tonnes, a month-end record. The regional split was stark: Europe and Asia saw inflows while North America posted outflows. Those flows carry demand past the quarter-end, though their durability matters as rate expectations turn hostile again.
Should investors sell immediately? Or is it worth buying Gold?
That hostility showed up yesterday. A stronger-than-expected US payrolls report pushed both the dollar and Treasury yields higher. Non-farm payrolls rose by 165,000 in October and the unemployment rate stood at 4.1%, a reading well ahead of forecasts. Traders now largely expect the Federal Reserve to raise rates in December, according to Bloomberg. Gold settled at $4,063.65 an ounce yesterday, a daily move of -0.6%, yet it remains up 4.9% over seven days — a recovery intact but contingent on further signals about US monetary policy.
Positioning tells a more cautious story. Money managers cut their bullish gold wagers in the week through 3 November to the lowest level since June, Bloomberg reported, so the recent rebound has met a more restrained stance from that cohort.
One brokerage sees the pullback as overdone. LS Securities said today that gold is as undervalued as it has been since 2022, with analyst Hong Seong-gi calling the price decline excessive. He ties his view of a favourable entry point to US rate hikes ending in the first half of 2027.
The next marker is US consumer price data for October, due on 10 November 2026. A hot inflation report could make a December rate increase more likely and keep pressure on bullion; a softer one could offer relief. Jobless claims, existing home sales and US producer prices follow later in the week, along with comments from central bank officials. Two forces are squaring off: firmer physical buying and sustained fund demand on one side, tighter rate expectations on the other. The recovery gains a firmer footing if demand persists and the drag from the dollar and yields eases.
Ad
Gold Stock: New Analysis - 7 November
Fresh Gold information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.
