Gold prices fell 0.2% to ₹96,704 per 10 grams after weaker-than-expected US inflation data. Core inflation was 2.8% in May, while headline inflation was 2.4%, lower than the expected 2.5%. This led many traders to book profits. However, the low inflation has increased expectations that the US Federal Reserve may cut interest rates in early September. Lower rates generally weaken the US dollar and bond yields, which is good for gold prices.
Overall market uncertainty remained high as a US court allowed some trade tariffs to remain in place for the time being. In India, higher gold prices dampened local demand. Lower retail sales led Indian gold dealers to offer discounts of up to $56 per ounce – the highest in a month. In contrast, Chinese gold premiums were stable at $10–$14, indicating strong demand there.
Globally, gold demand rose 1% year-on-year to 1,206 metric tons in the first quarter of 2025. While jewelry demand and central bank purchases both fell 21%, this was largely due to a 170% increase in investment through ETFs and bars.
