As food and fuel prices in India have risen, inflation has surged: in June, the wholesale price index (WPI) and the consumer price index (CPI) remained elevated at 15.18% and 7.01% respectively. Meanwhile, the 10-year Indian government bond rose by 1% between the end of November 2021 and July 2022.

Gold fell 3.5% in July, leaving it down 2.9% on the year at US$1,753/oz. A strong US dollar and sticky real yields weighted on gold in the first half of a July. But softer inflation expectations mid-month and jobless claims a few days later in the US nudged the dollar and real rates down. These reversals also coincided with extended positioning in futures markets for currencies, gold and to a lesser extent, rates.

Global gold ETFs registered outflows of 81t (-US$4.5bn) in July. This was the third consecutive month of outflows and the worst since March 2021. A stronger US dollar and COMEX net long positioning – the lowest since April 2019 – helped push the gold price down through the US$1,800/oz support level. Gold finished the month at US$1,753/oz, down 2.8% on the year.