Gold prices experienced a notable increase of 1.96%, concluding at Rs 145,680. This rise was bolstered by a resurgence in safe-haven buying, as investors remained vigilant regarding the intensifying conflict in the Middle East and redirected their attention to the upcoming U.S. Federal Reserve policy meeting scheduled for next week. Escalating geopolitical tensions, characterised by ongoing uncertainty surrounding Iran and interruptions to Red Sea shipping due to Houthi threats, have contributed to an increase in crude oil prices and heightened inflationary worries. Elevated energy prices have bolstered market anticipations that the Federal Reserve may sustain a restrictive monetary policy for an extended period.
Most analysts currently assess the likelihood of an interest rate increase later this year as significant, notwithstanding expectations that rates will remain steady in the forthcoming meeting. In the physical market, Swiss gold exports experienced a 3% decline in June, as diminished shipments to Britain and China counterbalanced increased exports to India and Saudi Arabia. UK exports dropped to 27.4 tonnes from 39.4 tonnes, and shipments to China decreased to 27.9 tonnes from 31.6 tonnes. In contrast, exports to India experienced a significant rebound, reaching 7.4 tonnes following exceptionally weak shipments in May.
Meanwhile, deliveries to Saudi Arabia saw a nearly fourfold increase, totalling 10.3 tonnes. Russia’s official gold reserves decreased to 2,282 tonnes at the start of July, while the value of its holdings rose to around $299 billion. Meanwhile, Indian gold discounts have expanded to a one-month peak of up to $45 per ounce due to subdued jewellery demand, while premiums in China and other Asian markets have largely remained stable.
London vault holdings rose by 0.77% month-on-month, reaching 9,464 tonnes by the end of June. Gold experienced short covering, as evidenced by a 3.31% decline in open interest alongside a significant increase in prices. Support stands at Rs 144,660 and Rs 143,640, while resistance is at Rs 146,350. A breakout above this level may push gains to Rs 147,020.