Gold Price Today, July 16: Gold prices traded lower on Thursday as rising crude oil prices amid escalating Middle East tensions renewed inflation concerns and reduced demand for the precious metal. However, a weaker US dollar and easing producer inflation data limited the downside in bullion prices.
As of 7:00 am, spot gold was trading 0.5 per cent lower, down USD 21, at USD 4,039.40 per ounce. Gold prices had ended the previous session nearly flat as supportive US Producer Price Index (PPI) data helped offset concerns over rising inflation risks stemming from geopolitical tensions.
Meanwhile, silver prices declined more than 1 per cent to trade at USD 57.1635 per ounce during early trade.
Domestic gold and silver prices
In the domestic market, gold and silver prices were not trading at the time of filing this report. In the previous session, gold prices settled 0.3 per cent lower at Rs 1,41,900 per 10 grams, while silver prices closed at Rs 2,20,750 per kg.
Middle East conflict drives oil prices higher
Precious metals remained under pressure as investors monitored developments in the Middle East. US forces launched a second wave of strikes against Iran, targeting military capabilities that were allegedly used to threaten commercial and naval vessels passing through the Strait of Hormuz. The operation was confirmed by the US Central Command (CENTCOM) and was ordered by the Commander in Chief.
The ongoing geopolitical tensions pushed crude oil prices higher, with Brent crude futures trading above USD 85 per barrel, while WTI crude futures hovered around USD 80 per barrel.
Higher oil prices typically increase transportation and production costs, raising inflation concerns and increasing the possibility of tighter monetary policy from central banks.
Interest rate expectations impact gold prices
Market participants are currently pricing in the possibility of at least one interest rate hike in 2026. Analysts estimate around a 50 per cent probability of a rate hike at the September FOMC meeting, while the chances of a December rate hike are seen above 71 per cent.
However, expectations of an immediate rate hike weakened after the latest US inflation-related data showed signs of easing.
According to US data, the Producer Price Index (PPI) declined 0.3 per cent month-on-month in June, marking the first monthly decline since August 2025. Meanwhile, core PPI increased 0.2 per cent month-on-month.
The fall in headline PPI indicated easing producer-level inflation, supporting expectations that interest rates could remain lower for longer, a factor that generally benefits non-yielding assets such as gold.
Weak dollar provides support to bullion
Despite the pressure from rising oil prices and interest rate concerns, gold losses remained limited due to weakness in the US dollar.
The US Dollar Index was trading around 100.51. A weaker dollar makes gold more affordable for buyers using other currencies, potentially boosting demand and providing support to bullion prices.
Gold Price Outlook
Gold prices are likely to remain sensitive to developments in the Middle East, crude oil movements, US inflation data, and Federal Reserve rate expectations. While geopolitical risks and inflation concerns could limit gains, expectations of softer monetary policy may continue to provide underlying support to precious metals.
(Disclaimer: The above article is meant for informational purposes only and should not be considered as any investment advice. ET NOW DIGITAL suggests its readers/audience to consult their financial advisors before making any money-related decisions.)
