Gold Price Today: Gold prices climbed above the USD 4,400 per ounce mark on Thursday, supported by US inflation data that came broadly in line with expectations.
The data eased concerns over further Federal Reserve tightening and strengthened expectations that the US central bank may avoid a rate hike at its September FOMC meeting.
As of 6:00 am, spot gold was up 0.5 per cent or USD 23 at USD 4,434.36 per ounce. Thursday’s gain marked gold’s fifth positive session in the last seven trading sessions. Spot silver also gained more than 1 per cent, trading around USD 66.10 per ounce.
Gold, silver prices on MCX
The domestic precious metals market was not trading at the time of writing. However, gold and silver futures on the Multi Commodity Exchange (MCX) settled at Rs 1,54,878 per 10 grams and Rs 2,37,800 per kg, respectively, in the previous session.
US CPI eases Fed rate hike concerns
US inflation data provided fresh support to bullion prices. The July CPI rose 0.1 per cent, while core CPI increased 0.2 per cent, matching market expectations.
The largely in-line inflation reading eased concerns that the Federal Reserve would need to tighten monetary policy further. Lower expectations for interest-rate hikes pushed yields lower and weighed on the US dollar, creating a supportive environment for gold.
According to the CME FedWatch Tool, the probability of a Fed rate hike has fallen to around 40 per cent from about 65 per cent (in the previous session) following the inflation data.
A lower-rate environment generally benefits gold because it reduces the opportunity cost of holding the non-yielding asset.
Weaker dollar adds to gold’s gains
The US dollar also supported bullion. The dollar index, which tracks the greenback against a basket of six major currencies, was down 0.1 per cent at 99.93. A weaker dollar makes gold cheaper for buyers holding other currencies, potentially boosting demand and supporting prices.
US PPI in focus
Market participants will now turn their attention to the US Producer Price Index (PPI) data due later on Thursday. The PPI reading could provide further clues about the direction of US inflation and influence expectations for the Federal Reserve’s upcoming monetary policy decisions.
US-Iran tensions remain in focus
Alongside US economic data, investors will also monitor developments between the US and Iran, particularly because any escalation could affect oil prices and, in turn, the inflation outlook.
Iran and the United States remain at loggerheads over efforts to reach a permanent end to the war in the Gulf. A senior Iranian source said there had been no progress in talks to revive the interim deal agreed in June and establish a timeframe for its implementation, Reuters reported.
Any renewed geopolitical tensions could push oil prices higher, potentially affecting inflation expectations and the Federal Reserve’s policy outlook. For bullion investors, developments on both the inflation and geopolitical fronts will therefore remain key drivers of gold prices.
