Gold prices experienced a notable rebound, closing 1.11% higher at Rs 145,300, bolstered by a slightly weaker U.S. dollar that stimulated buying interest. However, investor sentiment remained cautious due to ongoing geopolitical tensions in the Middle East and the prevailing uncertainty regarding the Federal Reserve’s policy direction. The recovery also reflected short covering after recent declines, while market participants continued to assess the implications of inflation risks and forthcoming interest rate decisions. The minutes from the June 2026 FOMC meeting indicated that policymakers continued to exhibit divisions regarding the trajectory of monetary policy.

While several officials acknowledged that persistent inflation risks could justify another rate hike, many continued to expect interest rates to conclude the year at or slightly below current levels under their base-case outlook. Traders are currently assigning a 63% probability of a September rate hike, as indicated by the CME FedWatch tool. Meanwhile, HSBC has adjusted its gold price forecasts downward, attributing this change to anticipated strength in the U.S. dollar and a more aggressive posture from the Federal Reserve. The bank now projects average gold prices of $4,560 per ounce for 2026 and $4,925 for 2027. Physical demand exhibited a varied landscape throughout Asia. Indian demand has shown signs of softening as domestic prices have rebounded from their recent lows.

Meanwhile, there has been a modest improvement in buying interest in China. The People’s Bank of China maintained its ongoing reserve diversification strategy, augmenting its gold holdings for the twentieth consecutive month with a significant addition of approximately 15 metric tonnes in June, representing the largest monthly purchase since October 2023. Gold holdings in London vaults increased to 9,392 tonnes at the end of May.

Technically, the market is experiencing short covering, evidenced by a 1.49% decline in open interest alongside a robust increase in prices. Gold encounters immediate support around Rs 143,795, with further support at Rs 142,290. Resistance is identified at Rs 146,110, and a sustained breakout could lead to gains extending towards Rs 146,920.