On Tuesday, June 2nd, during the European session, spot gold maintained a volatile but firm trend, trading within the $4520-$4530 per ounce range. Intraday gains expanded to 0.92%, recovering more than half of Monday's losses. The price began a fluctuating ascent from $4480 in the morning, breaking through the intraday resistance at $4520 after the European market opened. The hourly chart shows moving averages in a bullish alignment, with short-term bullish momentum dominating. The rise is primarily attributed to a retreat in overnight oil price gains, coupled with a slight pullback in the US dollar index, leading markets to reprice expectations for Federal Reserve interest rate cuts.
Key Development
Recent analysis from Bloomberg Economics suggests that, under the dual pressures of Middle East conflict driving up oil prices and persistent capital outflows, the Reserve Bank of India (RBI) may have covertly sold part of its gold reserves to bolster foreign exchange reserves. Economist Abhishek Gupta estimates that in the two weeks ending May 22nd, the RBI may have sold approximately $12 billion worth of gold while purchasing about $7.5 billion in foreign currency assets. This operation's context is notable: despite the Indian government raising gold import tariffs, which should theoretically increase the book value of the central bank's gold holdings, actual data shows a decline in the value of its gold reserves. This anomalous change is interpreted as a signal of selling.
As the world's third-largest crude oil importer, India is highly sensitive to the surge in oil prices caused by the closure of the Strait of Hormuz. Soaring energy costs combined with capital outflows are rapidly depleting its foreign exchange reserves and widening the current account deficit. The RBI's current priority is to safeguard more liquid foreign currency reserves to counter the risk of rupee depreciation. Although the central bank has intervened in the foreign exchange market to help the rupee outperform most Asian currencies since it hit a record low on May 20th (trading at 95.17 rupees per dollar on June 2nd, down 0.2% for the day), pressure remains. Governor Sanjay Malhotra is evaluating various measures to stabilize the exchange rate, including interest rate hikes and attracting overseas capital.
It is noteworthy that the storage structure of India's gold reserves is undergoing a significant shift. As of the end of March 2026, the RBI held 880.52 tonnes of gold, with 77% now stored domestically (compared to just 66% six months prior). This accelerated "repatriation of gold" is directly linked to the West's freezing of Russian assets, reflecting deep concerns among emerging market central banks about the safety of overseas reserves. Although currently pressured to sell gold, Gupta anticipates that once the US dollar weakens, foreign capital returns, or oil prices fall, the RBI will resume increasing its holdings of both foreign exchange and gold assets.
Latest Spot Gold Market Analysis
Gold experienced a minor correction followed by a fluctuating upward movement during the day. Short positions established around $4490 yielded profits, while those near $4480 were stopped out. On the daily chart, gold continues to consolidate within a lower-range recovery, with prices currently confined between $4450 and $4580. The short-term moving averages are largely flat and converging, suggesting a continued volatile trend in the near term. Although US-Iran negotiations face ongoing hurdles, the overall trend toward improvement is unlikely to reverse. Market focus may soon shift to the Federal Reserve, with this week's key variable likely being the non-farm payrolls data. On the 4-hour chart, prices have broken through a short-term cluster of resistance levels, and short-term moving averages are beginning to turn upward, indicating a slightly stronger bias. In smaller timeframes, prices are consolidating at higher levels with limited pullbacks, warranting attention for a potential secondary surge. Monitor for short-term adjustments.
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