Gold prices closed significantly lower by 1.98% at Rs 159,663 as investors reevaluated the Federal Reserve’s interest-rate perspective in light of robust US economic data that exceeded expectations. The July PCE price index rose by 0.2% month-on-month, surpassing expectations of 0.1%. Meanwhile, annual inflation accelerated to 3.7%, exceeding forecasts of 3.6%. Core PCE increased by 0.2% on a month-on-month basis and 3.3% on a year-on-year basis, aligning with projections. Consumer spending and personal income surpassed expectations, heightening worries that ongoing inflation and robust economic performance may constrain the Federal Reserve’s ability to implement monetary easing in the near term.
US GDP expanded 1.5% in Q2, consistent with the initial estimate, while durable goods orders increased by 1.1% in July, surpassing expectations of 0.5%. Consequently, markets currently reflect approximately a 60% likelihood of the Fed maintaining rates at their current level next month, a decrease from the 64% observed prior to the data release. Geopolitical developments offered minimal assistance, as Iran re-engaged in talks with Oman concerning the administration of the Strait of Hormuz, in the context of increasing economic strain from the United States. Physical demand exhibited a varied performance.
Indian gold demand remained lacklustre as prices hit three-month peaks, leading dealers to provide discounts of up to $65 per ounce relative to official domestic prices, an increase from the previous $62. Chinese demand exhibited stability, with bullion trading ranging from flat to a $6 premium, while purchases continued to demonstrate significant price sensitivity. By the end of June 2026, London vaults contained 9,464 tonnes of gold, reflecting a month-on-month increase of 0.77%. This gold is valued at approximately $1.2 trillion, which corresponds to around 757,145 bars.
Gold is currently experiencing long liquidation, as evidenced by a 5.5% decline in open interest to 9,577, alongside a price decrease of Rs 3,219. The market is presently anchored at Rs 158,030, and a persistent breach beneath this threshold may initiate additional deterioration toward Rs 156,395. On the upside, resistance is positioned at Rs 162,250, and a decisive move above this zone could pave the way toward Rs 164,835. Overall, the near-term momentum exhibits a cautious stance, as inflationary pressures and diminished expectations for rate cuts limit the potential for upward movement.
