As surging oil prices heightened concerns about inflation and drove up U.S. Treasury yields—the 30-year yield hit a nearly two-decade high—gold fell 1.08% to Rs 154,262. Crude prices surged to their highest level in over two weeks, driven by expectations of a prolonged Middle East conflict. This comes as Iran signalled a transition to a “fully offensive” military stance following the collapse of negotiations aimed at achieving a permanent resolution to the war. Markets currently reflect a 33% probability of a September Fed rate hike, a decrease from 47% a month prior. The forthcoming July FOMC minutes will be scrutinised for indications regarding monetary policy.
Despite the recent decline, speculative positioning remains supportive, with COMEX gold net long positions rising by 9,470 contracts to 141,868 contracts in the week ended August 11. This underscores ongoing safe-haven interest amid geopolitical uncertainty and volatile real interest rates. Physical demand, however, remains subdued in significant Asian markets. Indian gold discounts expanded to $62 per ounce, marking the highest level in over two months, whereas Chinese gold fluctuated between a $2 discount and a $5 premium. India’s net gold imports decreased by 23% year-on-year, totalling 98.1 tonnes in the second quarter of 2026.
Concurrently, domestic gold demand saw a decline of 6%, reaching 131.4 tonnes, as jewellery consumption weakened, despite a rise in investment demand. In the second quarter, global gold demand held firm at 1,268.9 tonnes, bolstered by central bank acquisitions totalling 289 tonnes, which is five times the revised figure of 57 tonnes from the first quarter, effectively countering 45 tonnes of outflows from exchange-traded funds. London vault holdings rose by 0.77% month-on-month, reaching 9,464 tonnes at the end of June, with an estimated value of around $1.2 trillion.
Gold is currently experiencing long liquidation, evidenced by a 4.43% decrease in open interest, which now stands at 9,614 contracts, coinciding with a price drop of Rs 1,678. Immediate support is positioned at Rs 153,675, beneath which prices may test Rs 153,095. Conversely, resistance is identified at Rs 155,280; a sustained movement above this threshold could pave the way toward Rs 156,305.
