Gold settled 0.49% higher at Rs 163,229, buoyed by a weaker dollar following the U.S. Treasury Department’s announcement of its buyback support plan. Investors are closely monitoring forthcoming U.S. inflation data and commentary from the Federal Reserve for insights into the interest-rate outlook. Markets are anticipating the release of the July Personal Consumption Expenditure price index on Wednesday, alongside Fed Chairman Kevin Warsh’s address at the Jackson Hole Symposium on Friday. Traders are assigning a 36% likelihood to a rate hike in September, while the chance of rates staying the same is at 64%, as indicated by the CME FedWatch Tool.
Geopolitical tensions bolstered safe-haven demand as the U.S. issued threats of extensive financial sanctions aimed at Iran’s trade partners. Physical demand exhibited a varied performance across key markets. In July, Swiss gold exports experienced a 2% decrease compared to the previous month. Notably, shipments to China saw a significant decline of 22%, totalling 21.8 tonnes, while deliveries to Hong Kong decreased from 8.1 tonnes to 1.4 tonnes. In contrast, Swiss shipments to the UK surged by 44% to reach 39.5 tonnes, whereas China’s central bank acquired 19.9 tonnes in July, marking its most significant monthly increase since October 2023.
Indian retail demand has shown a lacklustre performance, as dealers are providing discounts reaching as high as $65 per ounce. In contrast, Chinese bullion is being traded at premiums of up to $6. London vault holdings rose by 0.77% month-on-month, reaching 9,464 tonnes at the end of June, with a valuation of $1.2 trillion. The World Gold Council reported that India’s net gold imports decreased by 23% year-on-year, totalling 98.1 tonnes in the June quarter, while domestic demand experienced a decline of 6%, amounting to 131.4 tonnes. In the second quarter, global gold demand remained stable at 1,268.9 tonnes, driven by a notable increase in central-bank purchases, which reached 289 tonnes, effectively counterbalancing 45 tonnes of outflows from ETFs.
Technically, the market continues to experience short covering, as evidenced by a 4.22% decline in open interest to 10,541, coinciding with a price increase of Rs 791. Gold has established support at Rs 161,895, with an additional level at Rs 160,560. Resistance is identified at Rs 164,670; a sustained movement above this threshold may propel prices toward Rs 166,110.
