India caps on duty-free gold imports push Gold down

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Gold slides 2.17% to $4,551 today

Highlights

India increased its gold and silver import duty to 15%, raising costs for formal gold imports and dampening local demand.
New limits on duty-free gold for jewellery exporters and stricter import caps reflect India's measures to support the rupee and manage reserves.
Gold trades below key moving averages with bearish momentum, expected to fluctuate between $4,500 and $4,700 amid strong seller pressure.

Indian import curbs weigh on global gold flows and sentiment

On May 15, the World Gold Council reported that India raised the import duty on gold and silver to 15%, significantly increasing the total cost for formal gold imports into one of the world's largest consumer markets. Additional measures have been taken by Indian authorities, including strict new licensing caps for duty-free gold imports by jewellery exporters and further restrictions on eligible import volumes under the advance authorization scheme. These recent regulatory changes reflect India's ongoing efforts to manage foreign exchange reserves and support the rupee by suppressing gold demand, contributing to downward pressure on international gold flows.

Bearish momentum persists as resistance holds and volatility spikes

Gold remains below its MA-20 ($4,659.24), MA-50 ($4,659.83), and just under the MA-200 ($4,591.19), with the Ichimoku Kijun level at $4,693.86 acting as immediate resistance. Momentum indicators on the daily chart are bearish: both the MACD and ADX signal continued selling, while the RSI stands at 47.85 with a bearish bias. The Stoch RSI and CCI are neutral, indicating no clear overbought or oversold conditions, and the Bull/Bear Power (BBP) confirms seller dominance. The Awesome Oscillator (AO) provides no trend confirmation, suggesting a lack of counter-trend momentum. Today's session opened with a moderate gap down from yesterday's close ($4,651.91) to the open ($4,615.31), with the price hovering near session lows ($4,534.94–$4,620.65), underscoring heightened volatility and persistent downward pressure.

Sideways consolidation likely as rebound prospects diminish

Over the next five trading days, gold is expected to move within a volatility band of $4,500 to $4,700. The likelihood of a price rebound above current levels is low, with less than a 20% probability assigned to such a scenario. The most probable outcome is for gold to consolidate sideways between $4,500 and $4,700. A breakout above $4,700 would be required to signal bullish momentum, while sustained trading below $4,500 would confirm renewed selling and a potential downward break.

Viktoras Karapetjanc, expert at Traders Union, sees India's stricter import duties and caps as a significant headwind for global gold demand. He believes these macro policy moves, combined with sustained selling momentum and weak sentiment, limit any immediate upside for gold. The analyst expects price action to remain suppressed unless global flows change. "I am constructive longer-term, but right now the fundamentals and macro backdrop keep gold under pressure, so I remain watchful for stronger demand signals before turning bullish."

Previously it was reported that U.S. lawmakers intensified scrutiny of the Mint's gold sourcing practices due to potential links with illicit foreign mining operations. These ongoing compliance and supply chain concerns add a further layer of risk to current technical weakness, underscoring the need for traders to monitor geopolitical developments alongside the $4,700 level as a key inflection point in the coming sessions.

Source of Data: XAU Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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