Gold may consolidate after sharp rally; resistance at $4,500: Mirae Asset

Mirae Asset expects gold to find good support in the dips. After a brief consolidation, it is expected to test resistance at $4,500. Support is at $4,300/$4,200-$4,220.

Disclaimer: This article is written by Praveen Singh, head of commodities at Mirae Asset ShareKhan. Views expressed are his own. Readers' discretion is advised.

 

Gold: Consolidating its gains

 

Performance:

 

Boosted by cooling US CPI inflation, a dovish FOMC outcome, lower oil prices and an unexpected decline in the July US payroll numbers, spot gold surged to $4,449, a two-month high on Thursday. Afterwards, the metal edged a bit lower as traders booked profits following an in-line US CPI report.

 

At the time of writing this article on the night of August 13, the shiny metal was trading at $4,463, down 1 per cent for the day.

 

Data roundup:

 

Much-awaited July US CPI report showed a disinflationary trend holding as headline CPI edged lower from 3.5 per cent in June to 3.4 per cent in July, trailing the estimate of 3.5 per cent. Similarly, core CPI cooled from 2.6 per cent in June to 2.5 per cent (forecast 2.5 per cent). Month-on-month readings of both core and headline CPI inflation were subdued and matched their respective estimates.

 

US PPI cooled from 5.5 per cent Y-o-Y in June to 4.7 per cent in July and trailed the estimate of 4.9 per cent. Core PPI rose 4.2 per cent in July vs the forecast of 4.1 per cent and June data of 4.7 per cent. Core PPI was up 0.2 per cent M-o-M in July, lower than the forecast of 0.3 per cent and the upwardly revised 0.4 per cent M-o-M increase noted in June. Headline PPI was steady; thus, falling short of the expected 0.2 per cent rise. UK's Q2 GDP grew at an annualized rate of 1.2 per cent vs the estimate of 1.1 per cent and the prior growth rate of 0.9 per cent.

 

Geopolitics and oil:

 

Although Pakistan said that the US and Iran were close to a deal on Hormuz that will lead to a partial reopening of the Strait, the situation remains unclear as Iran seeks concessions from the US in exchange for opening the Strait of Hormuz. The conditions stated by Iran include reparations for war damages and unfreezing of Iranian assets. The US President Trump, in turn, has called for compensation for war damages, the killing of US soldiers, and protests earlier this year.

 

Crude oil prices swung on Hormuz flows and conflicting reports about the Strait.

 

Iran denied the US claims that the Strait is open and reaffirmed that no ship will be allowed to transit without formal approval from the Iranian authorities. At the time of writing, Brent oil futures were trading at $87.78, down 1.5 per cent for the day.

 

The International Energy Agency has revised its Q3 oil deficit higher from 0.80 mbpd it forecasted earlier to 1.8 mbpd, though it sees the oil market tipping into a surplus of 4.6 mbpd in 2027. It forecasts oil demand contracting by 1.6 mbpd in 2026 -- the fastest pace since the 2020 pandemic and up by nearly 0.50 mbpd it estimated a month ago.  Check - TOP GAINERS NSE | TOP LOSERS NSE

 

ETF and COMEX inventory:

 

Gold has been supported by improving ETF inflows, too. Total known global gold ETF holdings stand at 97.34 MOz, up 1.18 Moz/36 tons from the cycle low of 96.16 Moz seen on July 20. Holdings have risen for six straight days; however, they are still 1.61 Moz/50 tons down Y-T-D as investors reduced their ETF exposure in the wake of the Iran war on surging oil prices stoking inflationary concerns. Holdings are still down 3.92 Moz/122 tons from the cycle peak of 100.92 MOz seen before the start of the Iran war.

 

Registered COMEX gold inventory stands at 14.45 MOz, down 40 per cent from the record peak of 24.25 Moz seen in April 2025.  Inventories have recovered slightly from the cycle low of 14.19 Moz seen on August 7.

 

US Dollar Index and yields:

 

The US Dollar Index was flat at 99.98 at the time of writing this article. The Index is down 1.8 per cent from its cycle and 15-month high of 101.80 hit on June 24.

 

Two-year yields fell to 4.14 per cent -- lowest since July 17 and were down 1% for the day, while 10-year yields at 4.64 per cent were down 1.1 per cent.

 

China’s gold consumption:

 

China’s total gold consumption rose 1.23 per cent to 511.41 tons in the first half of 2026, according to the latest data from the China Gold Association (CGA), as strong investment demand offset the weak jewellery sector.

 

Demand for gold jewellery plummeted 33.88 per cent Y-o-Y to 132.13 tonnes, while investment demand recorded an increase of 28.42 per cent to 339.34 tonnes.

 

Central Bank watch:

 

July 29 FOMC meeting minutes will be released on August 19.

 

By China's PBoC will announce its monetary policy on August 20 wherein it is expected to keep the key rates unchanged, though weakening Chinese economy is expected to lead to a reduction in rates later this year.

 

Fed rate hike probability:

 

Fed rate hike probability in its September FOMC meeting has declined sharply from 75 per cent seen a month ago to 35 per cent.

 

Similarly, probability of the Fed hiking the benchmark rate by the year-end has fallen from 90 per cent to 70 per cent.

 

Upcoming data:

 

Major US data lined up in near term include July retail sales advance (August 14), July University of Michigan sentiment and inflation expectations (August 14), June TIC flows (August 18), weekly ADP employment change (August 18), July import price Index (August 18), July housing starts (August 18), July industrial production (August 18), August Philadelphia Business outlook index (August 18) and July Lead Index (August 20).

 

China's July property data, industrial production and retail sales will be released on August 17.

 

Traders will also monitor the Eurozone's Q2 GDP (August 14), July CPI (August 19) and the UK's July monthly labour report (August 18) and July CPI (August 19).

 

Outlook:

 

Weak nonfarm payroll report, subdued oil prices and weakness in the US Dollar Index are supportive of higher gold prices. Strong demand from official sector and resumption of ETF inflows further boost near-term prospects. However, because gold has spiked sharply higher in a short span, it is likely to consolidate its gains. It surged over 7 per cent in the week ending August 7.

 

At the same time, although we note a disinflationary trend in US CPI, overall, inflation is still elevated and quite higher than the Fed’s goal of 2 per cent. Thus, further consolidation will be healthy.

 

The yellow metal is expected to find good support into the dips. After a brief consolidation, it is expected to test resistance at $4,500. Support is at $4,300/$4,200-$4,220.