Gold Price Today, August 21: Gold prices traded in a narrow range on Friday (August 21), but remained on track to post their third consecutive weekly gain, supported by a weaker US dollar and heightened demand for safe-haven assets.
As of 6:00 am, spot gold was down 0.1 per cent at USD 4,514.42 per ounce. Despite the marginal decline in Friday’s session, gold was up around 3 per cent for the week so far.
Spot silver was also trading near USD 68 per ounce and was on track to gain more than 5 per cent for the week.
Gold and silver prices on MCX
On the domestic front, gold and silver futures on the Multi Commodity Exchange (MCX) were not trading at the time of writing. Gold and silver futures had settled at Rs 159,544 per 10 grams and Rs 2,43,298 per kg, respectively.
What pushed bullion higher this week
The US dollar index, which tracks the greenback against a basket of six major currencies, was down about 0.1% at 98.81. The index was lower by around 1% for the week so far. A weaker US dollar makes dollar-denominated gold cheaper for holders of other currencies, supporting demand for the precious metal. Gold and the US dollar generally share an inverse relationship.
However, the rise in US Treasury yields limited some of the upside in bullion. Yields on the benchmark 10-year and 30-year US Treasury notes moved higher this week, reflecting weakness in bond prices. Higher yields can weigh on gold because the precious metal does not offer interest income, making interest-bearing assets relatively more attractive.
Oil prices, Fed rate outlook cap gains
The upside in bullion was also capped by rising energy prices amid heightened tensions in the Middle East. Crude oil prices were trading above the USD 93-per-barrel mark, raising concerns about a renewed pickup in inflation. Higher oil prices can complicate the outlook for monetary policy by keeping inflationary pressures elevated, potentially reducing expectations for interest-rate cuts.
The Federal Reserve’s meeting minutes released this week also showed that some policymakers remained open to a rate hike this year, adding another layer of uncertainty for gold.
According to the CME FedWatch Tool, markets were pricing in around a 64% probability of a Fed rate hike at the September FOMC meeting.
Inflation data in focus next week
Looking ahead, investors will focus on upcoming US inflation data, which could provide fresh clues on the Federal Reserve’s interest-rate trajectory.
Any signs of persistent inflation could reinforce expectations of tighter monetary policy and weigh on non-yielding assets such as gold, while softer inflation data could support expectations of easier policy and provide further upside to bullion.
