Gold settled down 1.29% at Rs 149,543, influenced by a robust US dollar that hovered close to an 18-month peak, as investors anticipated crucial US inflation data, encompassing consumer and producer price reports, in addition to retail sales figures. Stronger-than-expected economic data may bolster expectations for tighter monetary policy, potentially elevating Treasury yields and the dollar, while exerting downward pressure on bullion.
Markets are currently assigning a probability of less than 20% to a Federal Reserve rate hike this month, whereas the likelihood of an increase by December is positioned at 85%, as indicated by CME FedWatch. St. Louis Fed President Alberto Musalem suggested that additional rate hikes could be required to return inflation to the central bank’s 2% target. Physical gold demand in India has shown a lacklustre response following the recent price rebound. However, dealers have adjusted discounts, reducing them to $6 per ounce from $14 last week, in anticipation of the forthcoming Dussehra and Diwali festivals. In China, gold was priced at a $10 premium relative to the global benchmark after the markets resumed trading post-Golden Week holiday.
In Singapore, premiums fluctuated between $0.50 and $1.50 per ounce. In contrast, Hong Kong premiums were observed to be between zero and $1. Meanwhile, Japanese prices exhibited a range from a $0.50 discount to a $0.50 premium. London’s gold vault holdings rose by 0.74% month-on-month, reaching 9,534 tonnes at the close of July 2026. This amount is valued at $1.2 trillion and is roughly equivalent to 762,723 gold bars. Goldman Sachs upheld its end-2027 gold price forecast at $5,400 per ounce, attributing this to ongoing central bank diversification, which serves as a structural support even in the context of tighter monetary policy.
However, three additional US rate hikes could precipitate a correction toward $4,070 before prices rebound to approximately $4,200 by the end of 2026. Gold is currently experiencing renewed selling pressure, as indicated by a 5.82% increase in open interest to 17,065 contracts, alongside a price decline of Rs 1,956. Support is identified at Rs 148,605, with subsequent support at Rs 147,665, whereas resistance is established at Rs 151,040. A sustained move above this resistance could propel prices toward Rs 152,535, while a breach below support may amplify the downward momentum.
