Gold Prices Slip As Strong US Inflation Fuels Fed Rate Hike Expectations

Global gold prices slipped on Monday after higher-than-expected US inflation data strengthened expectations that the Federal Reserve could raise interest rates later this week.

Gold and silver futures on the Multi Commodity Exchange (MCX) will trade only during the evening session from 5 PM to 11:30 PM on Monday, remaining closed during the morning session due to Ganesh Chaturthi.

MCX gold futures for October delivery stood at ₹1,52,655, while September silver futures traded at ₹2,34,886 per kg.

In international markets, spot gold traded near $4,340 an ounce, falling around 0.2 per cent on the day and 1.8 per cent over the week. Silver declined nearly 0.8 per cent to $64 an ounce, while platinum and palladium moved lower.

US inflation data released on Friday showed underlying price pressures rising in August.

The core Consumer Price Index (CPI), which excludes food and energy costs, increased 0.3 per cent from the previous month. Gold gained during Friday’s session but still ended the week 1.8 per cent lower.

Rising crude oil prices added to inflation concerns and further strengthened expectations of tighter US monetary policy.

Fears of disruptions to shipping through the Red Sea increased supply risks, helping push WTI crude above $107 a barrel.

The combination of higher inflation and surging oil prices has put additional pressure on gold and silver, as higher interest rates typically reduce the appeal of non-yielding assets such as precious metals.

Markets are pricing an 88% chance of a September Fed rate hike, while geopolitical tensions are raising energy supply concerns.

Attacks and disruptions have affected oil routes in Yemen, Saudi Arabia and the Strait of Hormuz.

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