Gold Price Today, August 18: Gold prices extended gains on Tuesday, hovering near a 10-week high, as a weaker US dollar and declining expectations of a Federal Reserve rate hike boosted the appeal of the non-yielding asset.
Gold, silver prices today
As of 6:30 am, spot gold was up 0.4 per cent, or USD 18, at USD 4,435 an ounce. Prices were trading close to their highest level since June 5, marking their strongest levels in more than two months.
Spot silver gained 0.8 per cent, or USD 0.6, to trade at USD 66.34 an ounce.
In the domestic market, gold and silver futures were not trading at the time of writing. In the previous session, gold futures settled at Rs 1,55,930 per 10 grams, while silver futures were at Rs 2,38,086 per kg.
Weaker dollar supports bullion
The US dollar index, which tracks the greenback against a basket of six major currencies, was trading around 99.56 after declining in the previous session. A weaker US dollar generally supports gold prices as the metal becomes cheaper for holders of other currencies, potentially boosting demand.
Fed rate hike bets fall
Adding to the bullish sentiment around bullion, expectations of a Federal Reserve rate hike at its next FOMC meeting fell to around 35 per cent following softer inflation data. Lower expectations for interest rate increases tend to support gold as they reduce the opportunity cost of holding non-yielding assets.
Crude prices remain above $90
However, elevated crude oil prices could pose a challenge for bullion if they add to inflationary pressures and revive expectations of tighter monetary policy. Brent crude futures were up 0.2 per cent to USD 90.87 a barrel, while WTI crude was trading around USD 84 a barrel, despite a slight decline in oil prices.
Higher crude prices can fuel inflation expectations, potentially increasing the likelihood of tighter monetary policy and higher interest rates, which could weigh on gold.
Fed minutes in focus
Market participants will now closely watch the minutes of the Federal Reserve’s latest meeting, due on Wednesday. The minutes could offer further clues on policymakers’ assessment of inflation in the world’s largest economy and provide insight into the likely path of US monetary policy, which could influence the trajectory of precious metals.
