Gold prices experienced a notable decrease of 2.97%, concluding at Rs 149,309, influenced by a robust U.S. dollar and an increasingly hawkish position from the Federal Reserve. The Fed maintained its current interest rates but indicated an increasing consensus for potential future hikes, as nearly half of the FOMC members foresee at least one rate increase by 2026. Inflation forecasts have been adjusted upward in response to persistent geopolitical tensions in the Middle East. Meanwhile, a notable increase in U.S. retail sales, growing by 0.9% in May, underscores the strength of consumer spending.
Despite a decrease in market expectations for a December rate hike, persistent inflation concerns and a strong dollar have continued to exert downward pressure on bullion prices. According to the World Gold Council survey, 45% of global reserve managers anticipate augmenting their gold holdings in the forthcoming year, indicating robust long-term confidence in the asset. Physical demand in India showed a modest improvement as lower prices drew in jewellery buyers; however, purchases continued to be cautious due to uncertain retail demand. In China, domestic premiums have softened, reflecting a decline in buying interest.
Meanwhile, India’s physically backed gold ETFs experienced their inaugural monthly outflow in a year during May as investors realised profits following the recent rally. In May, global gold ETF sentiment experienced a decline, marked by net outflows amounting to $2 billion, which resulted in a 2% reduction in total assets under management, bringing the figure down to $604 billion. Holdings experienced a slight decrease to 4,121 tonnes, whereas gold stocks in London vaults increased by 0.21% month-on-month, reaching 9,392 tonnes. Despite the monthly outflow, year-to-date ETF inflows continue to show a positive trend, amounting to nearly $17 billion.
Gold is currently experiencing renewed selling pressure, evidenced by a 2.89% increase in open interest alongside a significant decline in prices, suggesting the establishment of new short positions. Immediate support is identified at Rs 147,840, with a breach below this level potentially leading to Rs 146,365. On the upside, resistance is positioned at Rs 151,810, and a sustained move above this level could catalyse further recovery towards Rs 154,305.