Gold prices concluded the trading session with an increase of 1.11%, reaching Rs 147,378. This uptick was bolstered by disappointing US labour market data, which diminished the likelihood of an imminent interest rate increase by the Federal Reserve. In June, US nonfarm payrolls experienced a modest increase of 57,000, significantly underperforming against market expectations of 110,000. This figure represents the lowest monthly job growth observed in the past four months.
While the unemployment rate decreased to 4.2% from 4.3%, this decline was primarily attributed to a drop in labour force participation. In the aftermath of the employment report, the likelihood of a rate increase by the Federal Reserve in September diminished to approximately 50%. Concurrently, the US dollar experienced its most significant weekly drop since April, which further bolstered bullion prices. Fundamentally, central bank demand continued to provide support, as global central banks increased their gold reserves by a net 41 metric tonnes in May.
In the physical market, demand in India exhibited a decline as elevated domestic prices deterred new purchases, whereas buying interest in China showed a slight improvement due to reduced discounts relative to international prices. London vault holdings experienced a slight uptick to 9,392 tonnes, indicating a steady state of institutional holdings. Meanwhile, the global gold ETF market experienced net outflows of US$2 billion in May, primarily driven by selling in Asia and North America. However, year-to-date ETF inflows remain robust at nearly US$17 billion, suggesting that longer-term investment demand continues to be strong.
From a technical perspective, the market exhibits renewed buying interest, as evidenced by a 0.51% increase in open interest coupled with a price gain of Rs 1,620, suggesting the establishment of new long positions. Gold is anticipated to encounter immediate support around Rs 146,720, with subsequent support at Rs 146,060, while resistance is positioned at Rs 148,055. A sustained move above this level could extend the rally towards Rs 148,730.