Gold prices settled sharply lower by 1.93% at Rs 152,767, influenced by stronger-than-anticipated U.S. employment data that heightened expectations of a Federal Reserve interest-rate increase as soon as September. U.S. job growth accelerated significantly in August, while the unemployment rate held steady at 4.1%, underscoring the resilience of the labour market and dampening expectations for imminent monetary easing. Short-term interest-rate futures currently suggest a probability of approximately 65% for a rate increase at the Fed meeting scheduled for September 15–16, an increase from the prior 55% following the jobs report.
Market attention will now shift to forthcoming U.S. consumer and producer inflation data for additional insights into the Federal Reserve’s policy direction. Fed Governor Michael Barr and Chairman Kevin Warsh have also upheld a hawkish stance, underscoring the necessity for additional measures should inflation persist above the 2% target. Physical demand exhibited a mixed yet improving trajectory, as declining prices stimulated purchasing activity in India, whereas China maintained investment-driven demand despite subdued jewellery consumption.
Indian dealers reported discounts of up to $54 per ounce, a significant reduction from the $135 per ounce observed last week. In contrast, Chinese bullion was traded at premiums ranging from $3.5 to $9 per ounce. Additionally, the markets in Singapore, Hong Kong, and Japan noted modest premiums or slight discounts. London vault holdings rose by 0.74% month-on-month, reaching 9,534 tonnes at the close of July. This amount is valued at approximately $1.2 trillion, which is equivalent to around 762,723 gold bars.
Technically, the market is experiencing renewed selling pressure, evidenced by a 2.42% increase in open interest to 10,768 contracts, alongside a price decline of Rs 3,008, suggesting the establishment of new short positions. Gold is presently encountering support around Rs 150,325, and a persistent breach beneath this threshold may lead to a further decline toward Rs 147,885. On the upside, immediate resistance is positioned around Rs 156,140, while a decisive move above this zone could initiate a recovery toward Rs 159,515.
