Gold settled 0.73% lower at Rs. 148,450, declining by Rs. 1,093 as the US dollar climbed to an 18-month high ahead of key inflation reports that could influence the Federal Reserve’s monetary policy outlook. Stronger inflation readings may bolster expectations for tighter monetary policy, thereby supporting Treasury yields and the dollar, while simultaneously exerting pressure on non-yielding bullion. Federal Reserve Governor Christopher Waller stated that the increase in bond yields is mainly indicative of robust economic growth rather than heightened inflation expectations. Meanwhile, St. Louis Fed President Alberto Musalem suggested that additional rate hikes might be required to return inflation to the 2% target.
Traders have assigned a 19% probability to a rate hike this month, while the likelihood of an increase in December stands at 88%, as indicated by CME FedWatch. The International Monetary Fund underscored apprehensions regarding heightened public debt levels and increasing bond yields in the context of inflationary pressures driven by conflict. Physical gold demand in India exhibited a lacklustre performance subsequent to the price rebound, as domestic dealers reported discounts of up to $6 per ounce, a notable improvement from the $14 discounts observed the previous week. Upcoming Dussehra and Diwali festivals may bolster demand for Indian jewellery.
In China, gold was priced at a premium of $10 per ounce after the markets resumed operations post-Golden Week holiday, whereas in Singapore, premiums fluctuated between $0.50 and $1.50 per ounce. London’s gold vault holdings experienced a month-on-month increase of 0.74%, reaching a total of 9,534 tonnes by the end of July 2026. This quantity 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 troy ounce, referencing ongoing central bank diversification, while noting that tighter monetary policy may hinder short-term advancements.
The bank cautioned that three further US rate increases could momentarily elevate prices to approximately $4,070 before stabilising around $4,200 by the conclusion of 2026. Gold is currently experiencing renewed selling pressure, as evidenced by a 2.83% increase in open interest to 17,548 contracts, coupled with falling prices, which suggests a growing bearish sentiment among traders. Support is positioned at Rs. 147,820, with an additional level at Rs. 147,190. Conversely, resistance is identified at Rs. 149,535, beyond which prices may approach Rs. 150,620.
