Gold settled 0.73% higher at Rs 154,882, buoyed by a weaker dollar following U.S. inflation data that aligned with forecasts, thereby bolstering the view that the Federal Reserve might maintain interest rates at their current level in September. In July, U.S. consumer inflation increased by 0.1%, aligning with projections, following a decrease of 0.4% in June. Concurrently, softer employment figures have diminished expectations for an imminent rate increase. Markets are currently assessing a 48% likelihood of a September rate increase, a decrease from the previous 60% prior to the jobs report.
Meanwhile, Chicago Fed President Austan Goolsbee has adopted a cautious perspective, emphasising a heightened concern regarding enduring inflation as opposed to weaknesses in the labour market. Physical demand exhibited a varied landscape across key Asian markets. In India, gold discounts expanded to $47 an ounce from $44 the previous week, as retail buyers remained cautious following a rise in prices to a level not seen in over a month. Chinese premiums have decreased to $3-$5 an ounce from the previous range of $5-$8, while the markets in Hong Kong and Singapore have remained relatively subdued. In contrast, Japan has exhibited a slight uptick in demand, with bullion trading at approximately spot prices. London vault holdings increased by 0.77% month-on-month, reaching 9,464 tonnes at the end of June.
This amount is valued at approximately $1.2 trillion and is equivalent to around 757,145 gold bars. India’s unofficial gold inflows have risen in response to elevated import tariffs, whereas net gold imports experienced a 23% year-on-year decline, totalling 98.1 tonnes in the June quarter. Concurrently, overall demand for gold decreased by 6%, reaching 131.4 tonnes. In the second quarter, global gold demand remained stable at 1,268.9 tonnes, bolstered by a significant increase in central-bank purchases, which reached 289 tonnes, effectively counterbalancing the 45 tonnes of outflows from ETFs.
Technically, fresh buying emerged as open interest increased by 0.66% to 10,344 contracts, while prices appreciated by Rs 1,117. Gold exhibits support at Rs 154,055, with an additional level at Rs 153,220. Resistance is identified at Rs 155,780; a sustained movement above this threshold may lead to further gains toward Rs 156,670. Near-term bias remains optimistic while fluctuations in the dollar and physical demand will steer subsequent price trends.
