Gold prices experienced a slight decline, closing down by 0.25% at Rs 138,912, influenced by a robust U.S. dollar and diminishing anticipations regarding imminent Federal Reserve rate reductions. Market sentiment exhibited a cautious stance as policymakers suggested that the path of interest rates will be significantly influenced by inflation trends, leaving open the potential for both increases or decreases, contingent upon geopolitical developments.
Meanwhile, uncertainty surrounding tensions in the Middle East continued as Iran refuted any negotiations with the U.S., despite prior indications of potential diplomatic engagement. On the fundamental side, COMEX gold inventories experienced a notable decline, falling to 16.51 million ounces, the lowest level since November, representing a significant decrease from the peak observed last year.
However, ETF holdings experienced slight outflows, suggesting a degree of weakening in investment demand. Concurrently, money managers augmented their net-long positions, indicative of a discerning bullish sentiment. Physical demand trends exhibited a mixed pattern, as Indian discounts experienced a slight narrowing attributed to festive purchasing, whereas premiums in China diminished in response to weaker consumption levels. The ongoing support from central bank interest remains evident, yet high prices could temper new purchasing activity.
From a technical perspective, the market is experiencing long liquidation, as evidenced by a 10.75% decline in open interest to 4,473. Immediate support is identified at Rs 136,540, with a breach below this level likely to test Rs 134,160. On the upside, resistance is positioned at Rs 141,050, and a breach of this threshold may propel prices toward Rs 143,180.