Gold settled 0.93% higher at Rs 155,940, buoyed by a weaker US dollar and diminished expectations regarding a Federal Reserve interest-rate increase in September. An unexpected decline in US nonfarm payrolls in July, coupled with mild consumer inflation, has diminished the argument for a tighter monetary policy. Consequently, markets are now assigning a 33% probability to a September rate hike, down from 47% a month prior. Investors will pay close attention to the Federal Reserve’s July meeting minutes for additional insights into the policy trajectory.
Geopolitical uncertainty continued to provide support, as US envoys engaged with Egyptian, Qatari, and Turkish mediators in Cairo to further Gaza peace initiatives, all while Israeli airstrikes persisted. Physical demand, however, remained subdued in significant Asian markets. Indian gold discounts expanded to $62 per ounce, marking the highest level in over two months, as elevated bullion prices exerted pressure on consumption. India’s net gold imports experienced a year-on-year decline of 23%, totalling 98.1 tonnes in the June quarter. Concurrently, overall gold demand decreased by 6%, reaching 131.4 tonnes.
Increased import tariffs and escalating unofficial inflows have exerted additional pressure on organised trade. In the second quarter, global gold demand held firm at 1,268.9 tonnes, bolstered by robust central-bank acquisitions totalling 289 tonnes—an increase that is fivefold compared to the revised first-quarter figure of 57 tonnes. This surge effectively counterbalanced the 45 tonnes of outflows from ETFs. London vault holdings rose by 0.77% month-on-month, reaching a total of 9,464 tonnes, which is valued at $1.2 trillion.
Gold experienced new buying activity, as open interest increased by 2.67% to reach 10,060 contracts, while prices appreciated by Rs 1,434. The market is presently anchored at Rs 154,930, and a breach beneath this threshold could lead to a decline toward Rs 153,915. On the upside, resistance is positioned at Rs 156,560, and a sustained movement above this threshold could propel prices toward Rs 157,175.
