Ahead of the holiday season, lower prices drew some purchasing, but gains were still limited by rising US Treasury yields and anticipation of additional rate hikes by the Federal Reserve. Gold ended the day slightly higher at Rs 150,881, up 0.11%. The Fed raised rates by 25 basis points last week, while markets are pricing a 71% probability of another hike in October and 95% in December. Geopolitical developments continued to hold significance, as US-Iran negotiations centred on the reopening of the Strait of Hormuz and the alleviation of economic restrictions.
Physical demand exhibited varied trends, with Indian demand experiencing an uptick as domestic discounts decreased to $43/oz from a prior $60/oz, whereas Singapore and Hong Kong operated at premiums. In August, Swiss gold exports experienced a remarkable increase of 65% compared to the previous month, primarily driven by shipments to the UK, which reached 102.1 tonnes-the highest level recorded in seven years. Supplies to China rose by 20% to 26.1 tonnes, whereas deliveries to India fell by 58% to 3.5 tonnes. China’s net gold imports through Hong Kong increased to 58.491 tonnes from 56.193 tonnes in July.
London vault holdings rose by 0.74% month-on-month, reaching a total of 9,534 tonnes, with an estimated value of around $1.2 trillion. Goldman Sachs maintained its end-2027 projection of $5,400 per ounce, attributing this to ongoing diversification by central banks. However, it cautioned that stringent Federal Reserve tightening might lead to a temporary decline in gold prices to approximately $4,070, before rebounding to around $4,200 by the end of 2026. Standard Chartered also emphasised robust demand from the official sector and the structural support for gold.
Technically, the market continues to experience short covering, as evidenced by a 16.14% decline in open interest to 4,870 contracts, alongside a price increase of Rs 171, suggesting a reduction in bearish positions. Gold is presently underpinned around Rs 150,190, and a decline beneath this threshold may reveal Rs 149,505. On the upside, resistance is positioned near Rs 151,780, above which prices may progress toward Rs 152,685.
