Gold prices lingered near a one-week low as traders awaited key inflation data that could influence the US Federal Reserve's interest rate path. The precious metal traded in a narrow range during early Asian hours on Friday, with spot gold down 0.2% or $9 at $4,394.14 as of 5:40 am IST on Thursday, September 10. Since bouncing from a floor near $4000 an ounce in July, gold has stayed largely in a range either side of $4400 as traders repeatedly recalibrate the outlook for Federal Reserve policy. In the local Pakistani market, 24-karat gold was quoted at ₹463,136 per tola after a drop of ₹2,400, while 10-gram gold was sold at ₹397,064, down ₹2,058, according to the All-Pakistan Gems and Jewellers Sarafa Association.
The Federal Reserve is now a bit more likely to raise short-term borrowing costs at its meeting next week, according to traders betting on Thursday after the first of this week's key inflation reports. The CME FedWatch Tool shows markets are assigning a 60% probability of a US rate increase this month, up from the previous 65% probability. This strengthening in expectations comes as the Producer Price Index for final demand rose 0.4% last month after an upwardly revised 0.1% gain in July, according to the Labor Department's Bureau of Labor Statistics. The US consumer price index data is due at 1230 GMT, with markets closely watching for signs of inflation pressures that could influence the Fed's next move.
The European Central Bank raised rates for the second time this year to quell an energy-driven inflation rise and warned that price pressures could prove lasting, fuelling bets on more policy tightening as soon as October. This development adds another layer of complexity to global monetary policy expectations, as the ECB's actions will influence not only European markets but also global precious metals pricing. The ongoing geopolitical tensions and fluctuating economic indicators continue to sway the precious metals market, with traders closely monitoring both US and European central bank decisions for their impact on precious metals pricing.
Among other precious metals, spot silver fell 0.1% at $63.48, while platinum steadied at $1,777.42 and palladium lost 0.2% to $1,279.25. In the domestic market, gold and silver futures were not trading at the time of writing, with Wednesday's settlement prices showing gold at ₹1,53,721 per 10 grams and silver at ₹2,44,300 per kg on the MCX. Despite gold being known as an inflation hedge, rising interest rates often pressure the metal, which offers no yield. The sustained oil price environment above $90 is quickly feeding into consumer prices, keeping global bond yields near their recent multi-year highs and significantly raising the opportunity cost of holding non-yielding assets like gold.
Gold is expected to range trade in the run-up to US inflation data, with support levels at $4350/$4280/$4200-$4220 and resistance at $4530/$4600/$4670, as reported by The Times of India. The precious metal has been cushioned by dovish commentaries by the NY Fed President Williams and Fed Governor Waller in early September, along with intense pressure from US President Trump to cut interest rates despite elevated inflation. However, with the market so closely divided on the Fed's next move and swaps traders pricing in a 60% chance of a rate hike, traders are advised to utilize options strategies to hedge against binary outcomes. Key upcoming data includes US Core CPI MM, SA and YY, NSA August at 1230 GMT, along with US U Mich Sentiment Prelim September at 1400 GMT, all of which could influence precious metals pricing.
