Gold Price Today, August 4: Gold prices traded steadily above the USD 4,050 mark in a narrow range on Tuesday (August 4), as weakness in the US dollar offset inflation concerns stemming from higher crude oil prices, which have strengthened expectations of further interest rate hikes by the US Federal Reserve.
As of 6:00 a.m. IST, spot gold was up 0.1 per cent, or USD 4, at USD 4,059.22 per ounce, after moving within a relatively narrow USD 20 range during the session so far. Spot silver also edged higher, rising 0.24 per cent to USD 58.34 per ounce.
In the domestic market, gold and silver futures had not started trading at the time of writing. In the previous session, MCX gold futures settled at Rs 1,41,210 per 10 grams, while MCX silver futures ended at Rs 2,16,506 per kg.
Weaker dollar supports bullion
Gold remained in positive territory as a weaker US dollar provided support. The US Dollar Index (DXY), which measures the greenback against a basket of six major currencies, was trading at 99.96.
A weaker dollar typically benefits gold by making the precious metal cheaper for holders of other currencies. It also enhances gold’s appeal as a safe-haven asset when the US currency loses value.
Higher oil prices cap gains
However, gains in the yellow metal were capped by rising crude oil prices, which have revived inflation concerns. Brent crude futures were up 0.8 per cent at USD 84.20 per barrel, while WTI crude futures gained 0.5 per cent to USD 80.71 per barrel.
Higher oil prices can stoke inflationary pressures, increasing the likelihood that the Federal Reserve will keep interest rates elevated. Higher interest rates raise the opportunity cost of holding non-yielding assets such as gold, limiting further upside in bullion prices.
Fed rate hike expectations remain elevated
Markets are currently pricing in around a 65 per cent probability of a Fed rate hike at the next FOMC meeting. Expectations strengthen further for subsequent meetings, with the probability rising to around 75 per cent for October and more than 85 per cent for December.
Middle East developments in focus
Meanwhile, investors are also keeping a close watch on developments in the Middle East, particularly the progress of peace negotiations between Tehran and Washington.
On the geopolitical front, US President Donald Trump said negotiations with Iran are continuing but warned that this is the “last chance” for Tehran to sign what he described as a “good document.”
Key US economic data to watch
Investor focus will now shift to a series of key US economic releases this week that could provide further clues on the Federal Reserve’s interest rate trajectory. The key data points include:
- US JOLTS Job Openings
- Initial Jobless Claims
- US Nonfarm Payrolls (NFP) and Employment Report
Stronger-than-expected labour market data could reinforce expectations of tighter monetary policy, weighing on gold prices. Conversely, softer economic readings may boost expectations of policy easing, providing fresh support to the precious metal.
(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.)
