Gold prices edge up but set for weekly drop as US inflation data weighs

Gold prices rose slightly on Friday (August 15) but were on track for a weekly decline as stronger-than-expected US inflation data reduced the likelihood of a sharp interest rate cut by the Federal Reserve in September.

Spot gold was trading at $3,339 per ounce, up 0.1% as of 0244 GMT, while US gold futures for December delivery held steady at $3,384 an ounce.

For the week, bullion has slipped 1.8% an ounce.

In India, 24-karat gold was priced at ₹1,01,240 per 10 grams. The rate for 22-karat gold stood at ₹92,800 per 10 grams, while 18-karat gold was quoted at ₹75,930 per 10 grams, according to Goodreturns data.

US inflation data dampens aggressive rate cut expectations

The US producer price index (PPI) for July rose 3.3% year-on-year, exceeding the forecast of 2.5%, while weekly jobless claims came in lower than expected.

The hotter-than-expected wholesale price data has raised concerns that the Fed may avoid a 50-basis-point cut next month, opting instead for a smaller reduction.

“Gold is still grappling with the aftermath of the PPI jump, which raised questions over just how far the Fed may be inclined to reduce rates this year,” said Tim Waterer, Chief Market Analyst at KCM Trade. He added that if wholesale price gains feed into consumer prices, rate cut expectations could be scaled back, affecting gold’s appeal.

Geopolitics and currency moves in focus

On the geopolitical front, markets are watching the US–Russia meeting on August 15 for possible progress in Ukraine peace talks. However, investors remain cautious about the chances of a breakthrough.

Jateen Trivedi, VP Research Analyst – Commodity and Currency at LKP Securities, said, “Gold remains positive as long as $3,280 an ounce is held. Range for gold is seen between ₹99,000–₹1.01 lakh per 10 grams in India”

With gold’s safe-haven demand supported by geopolitical uncertainties and currency weakness, analysts expect short-term price action to hinge on upcoming US economic data and central bank commentary.

–With Reuters inputs