Gold prices declined 1.25% to settle at Rs 143,478, influenced by rising crude oil prices and escalating U.S.-Iran tensions, which bolstered expectations that the Federal Reserve may sustain a restrictive monetary policy for an extended period. Minutes from the Fed’s June meeting indicated that policymakers continued to express concerns regarding persistent inflation, with certain members advocating for an additional rate hike prior to the decision to maintain rates at their current level. While numerous officials continue to anticipate that interest rates will conclude the year at or marginally below present levels, markets are currently assigning a 58% likelihood to a rate increase in September.
Investors are closely observing forthcoming U.S. inflation data and the testimony from Fed Chair Kevin Warsh for additional guidance on policy direction. In light of the robust dollar and a stringent monetary policy perspective, HSBC has revised downward its average gold price projections for 2026 and 2027, although it continues to anticipate that prices will stay high in the medium term. Physical gold demand exhibited a varied landscape across key Asian markets. In India, dealers provided discounts reaching $19 per ounce relative to official domestic prices, as increased price volatility deterred retail purchasing.
In contrast, demand in China exhibited a degree of resilience, with bullion trading within a range of a $1 discount to a $5 premium. The People’s Bank of China has continued its gold purchasing trend for the twentieth consecutive month, acquiring around 15 metric tonnes in June, marking the most significant monthly rise since October 2023. Meanwhile, gold holdings in London vaults increased 0.21% to 9,392 tonnes by the end of May, underscoring persistent institutional demand despite recent price weakness.
Gold is currently experiencing renewed selling pressure, as evidenced by a 0.87% increase in open interest, which suggests the establishment of new short positions. Immediate support is positioned at Rs 142,850, with a breach beneath this threshold likely to reveal Rs 142,220. On the upside, resistance is identified at Rs 144,585, and a sustained movement above this threshold may initiate additional recovery towards Rs 145,690.