Gold prices fell by 1.16% to close at Rs 143,711, influenced by a significant increase in crude oil prices and heightened inflation worries following U.S. President Donald Trump’s announcement that the interim agreement intended to resolve the Iran conflict was “over.” The escalation in geopolitical tensions has led to an increase in oil prices, heightening concerns that sustained inflation may prolong elevated U.S. interest rates, thereby diminishing the attractiveness of non-yielding assets like gold.
Despite the price decline, central bank purchasing continued to provide support. The People’s Bank of China recorded its largest monthly gold purchase in over two and a half years, adding nearly 15 metric tonnes in June and extending its buying streak to 20 consecutive months. Tanzania’s central bank has confirmed the acquisition of approximately 28 metric tonnes of gold over the past 18 months, a strategic move aimed at bolstering its foreign exchange reserves. Bank of America has reduced its 2026 average gold price forecast by 14% to $4,360, attributing this adjustment to anticipated actions from a more hawkish Federal Reserve.
Nevertheless, the bank maintains that gold could ultimately achieve a price of $5,000 after the conclusion of the tightening cycle. Investment demand exhibited robustness, as global gold ETFs garnered net inflows of $8 billion in the first half of the year, notwithstanding the outflows of $8.9 billion recorded in June. Physical demand exhibited varied trends, with purchasing activity in India diminishing following a rebound in prices from recent lows, whereas demand in China experienced a modest improvement. Gold holdings in London vaults increased slightly to 9,392 tonnes at the close of May, indicating consistent institutional holdings.
Technically, the market continues to experience long liquidation, as evidenced by a 4.95% decrease in open interest in conjunction with the price decline. Gold is anticipated to encounter immediate support at Rs 142,325, with additional weakness potentially revealing Rs 140,940. Conversely, resistance is identified at Rs 145,225, succeeded by Rs 146,740 in the event of a sustained recovery.