Gold prices experienced a notable decline of 2.21%, concluding at Rs 140,309. This drop was influenced by rising geopolitical tensions in the Middle East, which in turn drove crude oil prices upward and reignited worries that inflationary pressures may prolong elevated global interest rates. The exchange of missile and drone attacks between the U.S. and Iran, coupled with Tehran’s announcement of yet another closure of the Strait of Hormuz, has heightened uncertainty across financial markets.
Investors are currently focused on Federal Reserve Chair Kevin Warsh’s congressional testimony, as well as the forthcoming U.S. CPI, PPI, and retail sales data, seeking new insights into inflation trends and the prospective trajectory of monetary policy. Fundamentally, the Federal Reserve’s latest report indicated that inflation accelerated further due to tariff impacts, higher energy costs, and continued investment in artificial intelligence infrastructure. COMEX data indicated a decrease of 1,964 contracts in speculative net long positions in gold, suggesting a waning of bullish sentiment.
HSBC has revised its average gold price forecasts for 2026 and 2027 downward, attributing this adjustment to anticipated strength in the U.S. dollar and a more aggressive stance on monetary policy. Physical demand exhibited a mixed pattern, as Indian markets experienced broader discounts attributed to price volatility. In contrast, China’s central bank has prolonged its gold-buying trend to 20 consecutive months, marking its most substantial monthly reserve increase since October 2023. London vault holdings also increased during May.
From a technical perspective, the market is experiencing long liquidation, as evidenced by a 6.49% decrease in open interest coupled with a notable drop in prices. Immediate support is positioned at Rs 139,330, with a breach below this level likely to exacerbate losses toward Rs 138,350. On the upside, resistance is observed at Rs 141,995, and a sustained movement above this threshold could pave the way toward Rs 143,680.