Gold Price Today, August 31: Gold prices traded largely flat on Monday (August 31), as a weaker US dollar supported the precious metal by making it more attractive to buyers holding other currencies. However, expectations of higher interest rates in the US following comments from Federal Reserve Chairman Kevin Warsh capped gains.
As of 5:55 am, spot gold was largely unchanged at USD 4,454.47 per ounce. The yellow metal slipped below the USD 4,500-per-ounce mark in the previous session after trading around the USD 4,600 level earlier on Friday. Meanwhile, spot silver edged higher to trade at USD 66.50 per ounce.
MCX Gold, Silver Prices
On the Multi Commodity Exchange (MCX), gold and silver futures were not trading at the time of writing this report. In the previous session, gold futures settled at Rs 1,56,400 per 10 grams, while silver futures ended at Rs 2,36,651 per kg.
US Dollar, Gold Prices
The US Dollar Index, which measures the greenback against a basket of six major currencies, was trading 0.1 per cent lower at 99.64.
A weaker US dollar generally makes gold cheaper for holders of other currencies, thereby supporting demand for the precious metal and lending support to prices.
Fed Rate Hike Expectations
However, the gains in gold remained capped by comments from Federal Reserve Chairman Kevin Warsh on inflationary pressures. Speaking at the Jackson Hole Symposium on Friday, Warsh said, “As of now, I believe the labor markets are consistent with full employment. But on the price-stability side of our mandate, the numbers are more concerning.”
Higher interest-rate expectations tend to weigh on gold as the metal does not offer any interest or yield. As yields on interest-bearing assets rise, the opportunity cost of holding non-yielding gold increases, potentially putting downward pressure on bullion prices.
Gold Prices in India
According to a Reuters report, gold discounts in India narrowed sharply this week as demand weakened amid market speculation that the government could consider rolling back a recent increase in import duties.
Crude Oil Prices, Inflation Concerns
Rising crude oil prices have also added to inflation concerns, potentially reinforcing expectations of higher-for-longer interest rates.
As of 6:10 am, WTI crude futures were up more than 1 per cent at USD 84.36 per barrel, while Brent crude futures were trading near the USD 90-per-barrel mark.
Higher energy prices can add to inflationary pressures, making the trajectory of interest rates an important factor for gold investors.
Gold Price Outlook
Apart from movements in the US dollar, interest-rate expectations and crude oil prices, investors will also track geopolitical developments in the Middle East for further cues.
Market participants will also focus on upcoming US economic data, including weekly jobless claims and the employment report, along with other indicators that could influence the Federal Reserve’s monetary-policy outlook.
The combination of US economic data, Fed rate expectations, dollar movements, crude oil prices and geopolitical developments is likely to guide the next move in bullion prices.
