Gold prices concluded the trading session with a modest increase of 0.11%, reaching Rs 141,781. This uptick was attributed to short covering following a period of weakness influenced by a robust US dollar and heightened Treasury yields. Market participants exhibited a degree of caution in anticipation of the US Federal Reserve’s policy decision and remarks from Fed Chair Kevin Warsh, seeking new indicators regarding the trajectory of interest rates. As anticipated, the Federal Reserve maintained the benchmark interest rate at 3.50%-3.75% for the fifth consecutive meeting in July 2026.
Nonetheless, predictions that a September rate increase is still a real possibility were strengthened by the dissent of three FOMC members who supported a 25-basis-point rate increase. The central bank also acknowledged that the US economy continues to expand at a solid pace despite heightened uncertainty stemming from ongoing Middle East tensions. Geopolitical risks have continued to be pronounced, with oil prices experiencing an increase of over 4% in response to military actions by the US and Saudi Arabia in Iraq, alongside an intercepted missile attack from Iran targeting US forces. Rising energy prices have bolstered expectations that interest rates may remain elevated for an extended period, thereby constraining gold’s potential for appreciation.
Investors are currently concentrating on the US Personal Consumption Expenditures inflation data, which is the Federal Reserve’s favoured measure of inflation, set to be released later this week. Meanwhile, China’s net gold imports through Hong Kong experienced a decrease of over 5% month-on-month, totalling 50.679 tonnes in June. Physical demand in India has shown a lack of vigour, as discounts have expanded to seven-week peaks of up to $56 per ounce. Conversely, buying interest has seen an uptick in China, where premiums have fluctuated between $3 and $6 per ounce.
Gold holdings in London vaults rose by 0.77% month-on-month, reaching a total of 9,464 tonnes by the end of June. Technically, the market is experiencing short covering, as open interest has decreased by 23.21% to 2,892 contracts, while prices have increased by Rs 158. Gold encounters immediate support at Rs 140,875, with further support at Rs 139,970, while resistance is observed at Rs 142,390. A sustained move above this level could extend gains towards Rs 143,000.