Gold settled 0.78% higher at Rs 153,763, buoyed by a weaker US dollar as investors evaluated renewed inflation risks stemming from escalating tensions in the Middle East and anticipated key US inflation data for additional insights into the Federal Reserve’s policy direction. The dollar has declined to a four-month low, as producer-price data and consumer-price inflation readings are anticipated to offer significant insights prior to the Fed’s policy decision on September 16. Markets are currently assigning a probability of approximately 60% to the likelihood of a Federal Reserve rate increase in the upcoming week.
Meanwhile, escalating tensions between the US and Iran have driven oil prices to their peak in over three months. This surge follows reports from Iran’s Revolutionary Guard regarding ballistic missile strikes on a military base in Jordan utilised by the US, as well as assaults on ten vessels, in the wake of Washington’s destruction of five Iranian oil tankers. The People’s Bank of China has continued its gold acquisition for 22 consecutive months, increasing its holdings to 76.73 million fine troy ounces from 76.08 million ounces at the end of July. Concurrently, the value of reserves rose to $350.08 billion from $306.35 billion.
Indian gold demand has seen an uptick as reduced prices have stimulated buying activity. However, Prime Minister Narendra Modi reiterated his advice to consumers, suggesting they refrain from purchasing gold unless absolutely necessary. Indian dealers quoted discounts of up to $54 per ounce, a significant narrowing from $135 last week. Chinese bullion was traded at premiums ranging from $3.5 to $9 per ounce. Concurrently, London vault holdings experienced a month-on-month increase of 0.74%, reaching 9,534 tonnes by the end of July, with a valuation of $1.2 trillion.
Technically, fresh buying interest is evident as open interest rose by 0.2% to 10,427, while prices appreciated by Rs 1,184. Gold is presently finding support around Rs 152,475, and a continued weakness beneath this threshold may lead to a drop toward Rs 151,190. On the upside, resistance is positioned around Rs 154,670, and a decisive move beyond this threshold could pave the way toward Rs 155,580.
