Gold prices concluded the trading session with an increase of 1.06%, reaching Rs 142,883. This uptick was bolstered by short covering as investors evaluated the diplomatic initiatives aimed at alleviating tensions between the United States and Iran. Reports of potential negotiations, including a suggested 10-day truce to ensure shipping through the Strait of Hormuz, alleviated immediate geopolitical anxieties while maintaining attention on the inflation trajectory.
Earlier conflict-driven gains in crude oil had elevated energy prices to over a one-month high, reinforcing concerns that increased fuel costs could perpetuate inflationary pressures. Consequently, numerous Federal Reserve officials persist in indicating that interest rates might have to stay elevated for an extended period. While the Fed is broadly expected to leave rates unchanged at its upcoming meeting, markets are currently pricing in over a 60% probability of a rate hike in September. On the supply side, Russia’s central bank reported gold reserves of 73.4 million troy ounces (2,282 metric tonnes) at the beginning of July, reflecting a decrease of 43.5 metric tonnes since the start of the year. Nevertheless, the total value of its holdings remained considerable at $299 billion.
In the physical market, demand exhibited a lacklustre performance across key Asian hubs. Gold discounts in India expanded to as much as $45 per ounce, driven by subdued jewellery demand and anticipations of declining prices. In contrast, Chinese premiums remained largely unchanged, reflecting a lack of vigorous retail purchasing activity. Meanwhile, gold stored in London vaults increased 0.77% month-on-month to 9,464 tonnes, equivalent to around 757,145 gold bars, underscoring the substantial global inventory levels.
From a technical perspective, the market observed short covering, as open interest decreased by 3.84% while prices increased. Gold is maintaining immediate support at Rs 142,325, with subsequent support at Rs 141,770. On the upside, resistance is positioned at Rs 143,265, and a sustained movement above this threshold could lead to further gains towards Rs 143,650.