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Gold prices remain under pressure as rising crude oil prices fuel inflation concerns and increase expectations of higher US interest rates. The latest quoted gold price stands at around $4,366.74 per ounce, down $56.70, or 1.28%, from the previous level.
Brent crude has moved close to the $100-per-barrel mark, raising concerns that higher energy costs could keep inflation elevated. Persistent inflation may make central banks more cautious about cutting interest rates, which could weigh on gold.
In India, indicative gold prices are around ₹15,431 per gram for 24K gold, ₹14,145 for 22K gold and ₹11,573 for 18K gold. Actual prices may vary depending on the jeweller, location, GST, making charges and other applicable costs.
Crude oil prices have also continued to rise. WTI crude is quoted at around $94.16 per barrel, up 1.21%, while Brent crude is around $99.27 per barrel, up 1.38%. Supply disruption concerns and escalating tensions in the Middle East have contributed to the recent rise in oil prices.
The increase in oil prices could add to inflationary pressure and influence expectations for the Federal Reserve's monetary policy. Stronger-than-expected US jobs data has already increased expectations of a potential rate hike, with markets pricing in roughly a 60% probability, compared with around 50% before the jobs data.
Higher interest rates generally put pressure on gold because the precious metal does not generate interest income. As yields on interest-bearing assets become more attractive, investors may reduce their exposure to gold.
The focus now turns to upcoming US inflation data. The Producer Price Index (PPI) is due Thursday, followed by the Consumer Price Index (CPI) on Friday. Investors will closely examine the figures for clues about the Federal Reserve's next policy move.
A stronger-than-expected inflation reading could increase expectations of higher interest rates and put additional pressure on gold. Softer inflation data, however, could reduce rate-hike expectations and provide support to bullion.
The US dollar is another important factor for gold prices. A weaker dollar can support gold by making the dollar-priced metal relatively cheaper for buyers using other currencies. However, the impact of a weaker dollar could be limited if rising oil prices and higher interest-rate expectations continue to weigh on investor sentiment.
Despite the recent pressure, gold's long-term performance remains strong. Based on the quoted figures, gold has gained approximately 143.68% since September 2021 and 227.96% since September 2016.
Safe-haven demand, central-bank purchases, geopolitical uncertainty and changes in global monetary policy remain important long-term drivers of gold prices.
For the near term, investors will be watching US CPI and PPI data, Federal Reserve rate expectations, Treasury yields, the US dollar, crude oil prices and developments in the Middle East.
Gold could remain volatile as markets weigh inflation concerns against expectations for US monetary policy. A hawkish Federal Reserve and persistent inflation could keep pressure on bullion, while softer inflation data or renewed geopolitical uncertainty could attract buyers.
For now, gold remains under pressure as crude oil approaches $100 a barrel and expectations of higher US interest rates increase. The upcoming US inflation data could provide the next major signal for the direction of gold prices.
