Gold prices experienced a significant decline, closing 3.59% lower at Rs 1,41,270 as international prices fell beneath the critical $4,000 per ounce threshold for the first time since November 2025. The correction was driven by a stronger U.S. dollar and rising expectations that the Federal Reserve may maintain elevated interest rates for an extended period. Market sentiment shifted to a bearish outlook following the Fed’s decision to uphold a hawkish stance, alongside ongoing concerns that inflationary pressures stemming from the Iran conflict could lead to additional monetary tightening.
Major financial institutions have adjusted their outlooks downward, with ING, Goldman Sachs, and Deutsche Bank reducing their near-term forecasts for gold prices while still holding a positive perspective for the longer term. Indicators of physical demand also continued to show weakness. India’s gold imports have decreased by nearly 70% following an increase in import duties to 15%, which has considerably diminished buying interest. Swiss gold exports experienced a 9% decline in May, as reduced shipments to India and Hong Kong counterbalanced increased deliveries to the UK and China. In the physical market, Indian dealers have increased discounts to as much as $54 per ounce, indicating a lack of demand even as prices have fallen to a two-and-a-half-month low.
China has also implemented discounts for the first time since late December, as investors continue to exercise caution while awaiting clarity on the U.S.-Iran agreement. Investment demand has also experienced a decline. Global gold ETFs experienced net outflows amounting to $2 billion in May, primarily driven by withdrawals from Asia and North America, resulting in total holdings decreasing to 4,121 tonnes. India’s physically backed gold ETFs experienced their inaugural monthly outflow in a year, attributed to profit-booking activities.
Technically, the market is experiencing renewed selling pressure, as open interest increased by 2.63% to 9,583 lots, while prices have sharply declined, suggesting the establishment of new short positions. Gold exhibits immediate support at Rs 1,39,640, with a breach below this level likely to catalyse additional weakness towards Rs 1,38,010. On the upside, resistance is observed at Rs 1,44,190, and a sustained movement above this threshold could pave the way for a recovery towards Rs 1,47,110.