Yesterday, gold prices settled down by -0.72% at 71,450 as investors anticipated a series of economic reports and statements from Federal Reserve officials throughout the week to gauge the Fed’s timeline for potential interest rate cuts. Despite a softer-than-expected Consumer Price Index (CPI) in the US for May, investors remained cautious due to the Federal Reserve's projections of higher interest rates and continued price growth in the US economy over the next two years. Philadelphia Fed President Patrick Harker indicated that the central bank could consider a rate cut this year if there is more evidence of slowing inflation, reflecting a cautious stance among Federal Open Market Committee (FOMC) members.
In China, the People's Bank of China paused its aggressive gold-buying spree in May due to high prices, which halted the strong momentum of bullion demand seen since 2022. Gold imports to China via Hong Kong fell by 38% in April compared to the previous month, according to data from the Hong Kong Census and Statistics Department. Net imports totaled 34.6 metric tons in April, down from 55.8 tons in March. In India, gold demand remained tepid despite recent price corrections, with buyers postponing purchases due to the absence of major festivals. Indian dealers offered a discount of up to $10 per ounce over official domestic prices, compared to last week's $14 discount. In China, premiums charged by dealers over international spot prices fell to $18-$26 per ounce, down from $27-$32 the previous week. China's central bank held off on gold purchases for its reserves last month after 18 consecutive months of buying.
Technically, the gold market is experiencing long liquidation with open interest remaining unchanged at 14,746, while prices dropped by -515 rupees. Currently, gold has support at 71,255, with a potential test of 71,060 if it falls below this level. On the upside, resistance is likely at 71,715, and a move above this level could see prices testing 71,980.