Due to pressure from a stronger US currency and market caution ahead of the Federal Reserve’s policy announcement, gold prices fell 1.01% to settle at Rs 141,623. Market participants are closely monitoring the central bank’s guidance on interest rates, with expectations firmly focused on rates remaining unchanged this week. However, markets are pricing an 81% chance of a rate increase in September, while CME FedWatch data shows that the likelihood of a 25-basis-point rate hike has increased to 36.3% from 16% a week earlier.
Elevated expectations regarding interest rates persist in exerting pressure on non-yielding assets like gold. Meanwhile, President Donald Trump reiterated his call for lower U.S. interest rates, although geopolitical uncertainty persisted as negotiations with Iran remained fragile despite renewed diplomatic efforts. Investment demand exhibited a range of signals. CFTC data revealed that COMEX gold speculators increased net long positions by 4,438 contracts to 123,586, reflecting continued institutional interest.
In contrast, China’s net gold imports through Hong Kong experienced a decline of over 5% in June, totalling 50.679 metric tonnes, which suggests a weakening in import demand. Physical demand exhibited variability throughout Asia. India’s gold discounts expanded to $56 per ounce, marking the highest level in seven weeks, as elevated prices deterred purchasers. Conversely, Chinese premiums have improved to $3-$6 per ounce, indicating a rise in buying interest. London vault holdings rose by 0.77% to 9,464 tonnes, with a valuation of around $1.2 trillion, underscoring the substantial global bullion inventories.
Technically speaking, the market is still in a long liquidation, as seen by the 14.87% decline in open interest and dropping prices. Immediate support is identified at Rs 141,065, with subsequent support at Rs 140,505. Resistance levels are established at Rs 142,270 and Rs 142,915. While a breakout over resistance could rekindle short-term positive momentum, a persistent move below support might prolong the corrective phase.