Gold Price Today, October 16: Gold prices traded lower on Friday, with the yellow metal heading for a weekly decline as hotter-than-expected US inflation data fuelled expectations of a Federal Reserve rate hike.
As of 5:50 am, spot gold was down 0.4 per cent, or USD 14.9, at USD 4,155.55. The yellow metal had declined about 1 per cent so far in the week ending October 16.
Spot silver also traded lower, falling 0.5 per cent to USD 57.16. The white metal was heading for a weekly decline of over 6 per cent.
On the domestic market, precious metals were not trading at the time of writing this report. In the previous session, gold and silver futures on the Multi-Commodity Exchange (MCX) settled at Rs 1,47,550 per 10g and Rs 2,10,920 per kg, respectively.
Gold Price Today: Why is gold down this week?
Bullion prices came under pressure this week following hotter-than-expected US inflation data. The US Consumer Price Index (CPI) and Producer Price Index (PPI) data indicated rising inflation levels.
On Wednesday, US September CPI rose 0.6 per cent month-on-month (MoM) and 3.7 per cent year-on-year (YoY), slightly above forecasts. Core CPI increased 0.3 per cent MoM and 2.6 per cent YoY.
US September PPI jumped 1.3 per cent MoM, marking its largest rise since March 2022. It also increased 6.3 per cent YoY, far above expectations, driven largely by energy costs.
Hotter CPI and PPI readings can strengthen expectations of higher-for-longer interest rates, pushing up bond yields and the US dollar. This reduces gold’s appeal as a non-yielding asset.
Gold Price Today: Fed rate hike expectations rise
Following the inflation data, expectations of a rate hike by the Federal Reserve during the December FOMC meeting rose above 93 per cent, as per CME’s FedWatch Tool.
Higher rate-hike expectations are typically bearish for gold, as rising interest rates increase the opportunity cost of holding non-yielding bullion and often strengthen the US dollar.
Gold Price Today: Middle East conflict and crude oil prices
The rising level of inflation was contributed to by the US-Iran conflict in the Middle East, which has pushed energy prices higher.
Brent oil futures traded above USD 105 per barrel, while WTI futures traded at USD 97.35.
Gold Price Outlook
Comments from US Federal Reserve officials will be closely monitored for signals on the future path of monetary policy and its potential impact on gold prices.