Gold settled 0.91% higher at Rs 150,390, buoyed by a softer-than-anticipated US inflation report that diminished expectations for a Federal Reserve rate hike in October. US inflation increased at a rate below expectations in August, with revisions to prior month price pressures indicating a downward adjustment. This has led to a decrease in the market-implied probability of an interest rate hike in October, now standing at 37%, down from 45%. However, the anticipation for a rate increase in December continues to be robust, remaining at 89%. Gains were constrained by increasing Treasury yields and a robust US dollar, as Cleveland Fed President Beth Hammack cautioned that persistently elevated inflation might become ingrained in consumer expectations.
HSBC has revised its average gold forecast for 2026 down to $4,490 per ounce from a previous estimate of $4,560. Additionally, the forecast for 2027 has been adjusted to $4,825, reflecting anticipated further increases in US interest rates and rising oil prices. Goldman Sachs upheld its end-2027 forecast at $5,400, indicating that tighter monetary policy could hinder gold’s short-term appreciation without altering its long-term perspective, while ongoing central-bank diversification continues to be a significant structural driver.
Physical demand across major Asian markets showed a slight uptick as reduced prices enticed buyers. Indian dealers provided discounts of up to $14 per ounce, a significant reduction from the previous $43, in anticipation of Dussehra and Diwali purchasing activities. Chinese bullion was observed trading at premiums of 5-10, whereas in Singapore, Hong Kong, and Japan, prices varied from modest discounts to premiums. London vault holdings reached 9,534 tonnes at the end of July, reflecting a month-on-month increase of 0.74% and valued at approximately $1.2 trillion, which corresponds to around 762,723 bars.
Geopolitical uncertainty continued to be a significant factor as Iran announced it had received a response from the United States regarding its most recent ceasefire proposal. Gold is currently experiencing renewed buying interest, as evidenced by a 1.52% increase in open interest to 15,955, alongside a price increase of Rs 1,354. The market is finding support around Rs 149,570, and a persistent breach below this threshold may pave the way toward Rs 148,750. On the upside, resistance is positioned around Rs 150,975, and a decisive movement beyond this threshold could propel prices toward Rs 151,560.
