As markets evaluated the prospects for Federal Reserve monetary policy, cooling crude oil prices and a declining US dollar helped gold close 1.26% higher at Rs. 151,499, up Rs. 1,889. Concerns regarding disruptions in Middle East supply have diminished following US President Donald Trump’s assertion that the United States would refrain from military action against Iran prior to the upcoming midterm elections. This comes in the context of ongoing initiatives aimed at resolving the conflict that has impacted global energy markets. However, inflation concerns remain elevated, with St. Louis Fed President Alberto Musalem suggesting that further interest rate increases may be necessary to bring inflation back to the Federal Reserve’s 2% target.
Based on CME FedWatch data, the markets are currently assigning a 19% likelihood to a rate hike in October, while there is an 84% chance of at least one 25-basis-point increase occurring by December. Higher interest rates may constrain gold’s potential for appreciation by bolstering the dollar and diminishing the attractiveness of non-yielding bullion. Physical demand in India continued to exhibit sluggishness in the wake of the price rebound, although domestic discounts have contracted 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, subsequent to the market’s reopening post-Golden Week holiday. At the conclusion of July 2026, London vaults contained 9,534 tonnes of gold, reflecting a month-on-month increase of 0.74%, with a valuation nearing $1.2 trillion. Goldman Sachs upheld its end-2027 gold price forecast at $5,400 per ounce, emphasising the ongoing diversification by central banks as a significant structural factor. However, it cautioned that further rate hikes might lead to a correction toward $4,070, followed by a possible recovery to $4,200 by the end of 2026.
Technically, the market is experiencing short covering, with open interest decreasing by 2.71% to 16,126 contracts in conjunction with increasing prices. Gold is presently encountering support at Rs. 150,870, with additional support at Rs. 150,240. Resistance levels are established at Rs. 151,915 and Rs. 152,330. A sustained move above Rs. 151,915 could extend the recovery toward Rs. 152,330, whereas a break below Rs. 150,870 may expose the next support at Rs. 150,240.
