Gold settled sharply lower by 1.71% at Rs 156,281 as traders heightened their expectations of a Federal Reserve rate hike in light of Chair Kevin Warsh’s remarks regarding ongoing inflationary pressures. Warsh underscored that inflation has not significantly abated, with the 2% target persisting as a steadfast goal, while financial conditions are presently not constrictive. He also reiterated that interest rates remain the Fed’s predominant tool for controlling inflation, prompting money markets to price in more than a 50% probability of a September rate hike, which is exerting downward pressure on gold. Physical demand has shown signs of deterioration, especially in India, where gold discounts have expanded significantly to reach as much as $135 per ounce above official domestic prices, in contrast to $65 observed the previous week, representing the most substantial discount in three months.
Market participants express apprehension regarding the potential reversal of the recent hike in gold and silver import duties from 6% to 15%, implemented in May. There is speculation that these elevated duties may have fostered smuggling activities and diminished legitimate demand. In China, bullion was exchanged at discounts of $2 to $5 per ounce relative to global spot prices, whereas in Singapore, prices fluctuated between a $1 discount and a $2.50 premium. Hong Kong and Japan experienced relatively narrow premiums and discounts, reflecting a lack of vigorous physical market activity in key Asian centers. At the conclusion of June 2026, London vaults contained 9,464 tonnes of gold, reflecting a month-on-month increase of 0.77%. This quantity is valued at approximately $1.2 trillion, which corresponds to around 757,145 gold bars.
Technically, the market continues to experience long liquidation, as evidenced by a 9.42% decline in open interest to 11,015, alongside a price drop of Rs 2,715. This suggests a trend of position unwinding rather than the establishment of new aggressive short positions. Gold is presently encountering support around Rs 154,790, and a persistent breach beneath this threshold may reveal Rs 153,300. On the upside, resistance is positioned around Rs 159,065, and a decisive movement above this threshold could initiate a recovery toward Rs 161,850.
