Gold holds near $4,192 as Fed hawkishness counters safe-haven demand

COMEX gold futures settled at $4,209.10 an ounce, down 0.87%, after swinging between $4,151.40 and near $4,240 intraday.

"Gold traded positively as rupee weakness supported domestic bullion prices. Focus now shifts to this week's US Non-Farm Payrolls and unemployment data, which could provide the next major trigger for gold," Jateen Trivedi, VP Research Analyst at LKP Securities, said.

The US/Iran interim peace treaty — the Islamabad Memorandum of Understanding signed June 19 in Switzerland — has eased supply risks through the Strait of Hormuz, with Brent crude sliding below $80 a barrel to multi-month lows. That has reduced the safe-haven premium embedded in precious metals through the spring. At the same time, the Federal Reserve's June 16-17 FOMC meeting, Chair Kevin Warsh's first, held the target range at 3.50% to 3.75% and shifted hawkishly, with markets now pricing a 38.5% probability of a rate hike in July and a 51.7% probability in September, according to CME data.

The competing forces have locked gold into a tight consolidation range. The 2-hour chart shows a dynamic support trendline at $4,171.90, with overhead resistance at the 2H EMA50 of $4,232.60 and the 2H EMA200 at $4,325.04. The next catalyst is the May PCE print due June 25 — the Fed's preferred inflation gauge — which could determine whether gold tests $4,000 support or stages a rebound toward $4,350.

PBOC's 17-Month Buying Streak Anchors Physical Demand

Despite the headwinds from high real yields and a strong dollar, physical demand continues to underpin prices. The People's Bank of China extended its non-public gold buying streak to 17 months, while broader emerging-market central banks continue rotating out of G7 debt instruments into physical gold for reserve allocation. This price-insensitive sovereign bid has counteracted the valuation pressure from the Warsh Fed's monetarist stance.

India's gold imports fell 39% month-over-month to $3.4 billion in May, with estimated volumes of 25-30 tonnes, well below April's 46 tonnes and the two-year monthly average of 59 tonnes, according to Augmont Research. The May import duty hike from 6% to 15% compressed physical demand, though domestic price discounts have narrowed from $150 an ounce post-hike to about $25 an ounce by mid-June, showing demand revival.

Silver rose 0.35% to $65.13 an ounce, while COMEX copper gained 0.94% to $6.4340 a pound, reflecting the broader mixed tone across the metals complex. Gold at current levels is about 1.4% below the all-time high set earlier this year, with the metal's 17-month rally supported by sovereign buying that shows no sign of abating.

This article is for informational purposes only and does not constitute investment advice.