Due to pressure from rising crude oil prices, which increased fears about inflation, raised Treasury yields, and strengthened predictions of monetary tightening by the Federal Reserve at this week’s policy meeting, gold fell 0.28% to Rs 150,809. Recent US inflation data indicated that consumer prices accelerated in August, with underlying inflation experiencing its most significant monthly increase in four months. Markets are currently reflecting a 92% likelihood of a 25-basis-point increase in the Federal Reserve’s interest rate, as indicated by the CME FedWatch Tool. The Bank of Japan is anticipated to increase rates on Friday, driven by ongoing inflation and robust economic growth, which heighten expectations for additional tightening measures by leading central banks.
Increasing energy costs and stagnant advancements in Middle Eastern diplomatic efforts persist in fuelling inflation apprehensions, as a gathering involving Iran and other Gulf nations has been delayed. For the week ended September 8, gold speculators on COMEX reduced net long positions by 1,263 contracts to 139,548 contracts, indicating some moderation in bullish positioning. Physical demand in India has shown a lacklustre performance, as fluctuating prices have deterred purchases. Dealers are now providing discounts of up to $75 per ounce compared to official domestic prices, which is an increase from last week’s discount of $54.
In contrast, Chinese bullion demand exhibited resilience, with gold trading at a $8 per ounce premium to global prices. In Singapore, gold exhibited a trading range between a $1 discount and a $1.70 premium. In contrast, Hong Kong prices fluctuated from a $0.50 discount to a $1.70 premium, while Japan’s market saw prices ranging from a $0.25 discount to a $0.50 premium. London vault holdings reached 9,534 tonnes at the end of July, reflecting a month-on-month increase of 0.74%. This amount is valued at approximately $1.2 trillion, which corresponds to about 762,723 gold bars.
Technically, the market continues to experience long liquidation, as evidenced by a 3.38% decline in open interest to 9,200, alongside a price drop of Rs 421. Gold is presently encountering support at Rs 150,045, and a breach beneath this threshold may reveal Rs 149,280. Resistance is positioned at Rs 151,565, and a sustained movement above this threshold could pave the way toward Rs 152,320.
