Gold prices concluded the trading session with an increase of 1.02%, reaching Rs 143,232. This uptick was bolstered by a depreciating U.S. dollar, as market participants assessed the Federal Reserve’s recent monetary policy stance alongside escalating geopolitical tensions in the Middle East. The Federal Reserve maintained interest rates at 3.50%-3.75%, with Chair Kevin Warsh emphasising the central bank’s dedication to managing inflation. Meanwhile, renewed military action between the United States and Iran heightened demand for safe-haven assets after the U.S. launched strikes on multiple IRGC targets following Iranian missile attacks on U.S. troops in Jordan.
Despite gold’s allure in times of geopolitical uncertainty and inflationary pressures, the anticipation of persistently high interest rates continues to constrain upward momentum. Markets are currently assigning a 65% probability to a September rate hike, a decrease from nearly 81% prior to the Fed meeting, as indicated by CME FedWatch. On the physical market front, China’s net gold imports through Hong Kong experienced a decline of over 5% month-on-month, totalling 50.679 tonnes in June, which suggests a decrease in import demand.
India’s physical market exhibited a lacklustre performance as elevated domestic prices deterred buyers, leading to dealer discounts expanding to $56 per ounce, marking the most significant increase in seven weeks. However, buying interest in China improved, with gold trading at premiums of $3 to $6 per ounce over global spot prices. Gold holdings in London vaults rose by 0.77% to reach 9,464 tonnes at the conclusion of June. The World Gold Council reported that India’s June-quarter net gold imports fell 23% year-on-year to 98.1 tonnes, while total gold demand declined 6% to 131.4 tonnes. This decline reflects weaker jewellery consumption despite resilient investment demand following higher import tariffs.
Technically, the market experienced short covering, as open interest fell by 26.21% to 2,134 contracts while prices increased significantly. Gold is maintaining immediate support at Rs 142,020, with a breach below this level likely to lead to further declines toward Rs 140,810. On the upside, resistance is positioned at Rs 143,920, and a sustained movement above this threshold could facilitate a rally towards Rs 144,610, maintaining a cautiously positive near-term outlook.