Escalating Middle East Tensions Weigh on Global Markets

Global markets were affected by escalating tensions in the Middle East as investors weighed the implications for inflation and interest rates. Gold prices settled down 0.83% at Rs1,53,094 due to market participants weighing the effects of Iran and US threats. Official-sector demand and structural drivers continue to support gold, although the pace of appreciation may moderate.

India's demand remained subdued as buyers awaited lower prices, with dealers quoting discounts of up to $60 per ounce compared with $75 previously. However, upcoming Dussehra and Diwali festivals could improve physical demand in India. China's gold premiums narrowed to $5 per ounce from $8, supported by robust investment demand.

London vault holdings stood at 9,534 tonnes at end-July, up 0.74% month-on-month and valued at around $1.2 trillion. Goldman Sachs retained its end-2027 forecast of $5,400 per ounce, stating that tighter monetary policy could slow near-term gains but not necessarily alter the longer-term trajectory.