Gold Prices Today: Yellow metal to lose shine on Fed rate hike fears after soaring US inflation

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Gold prices edged lower on Wednesday in the international markets after hotter-than-expected US inflation data boosted the dollar and expectations that the Federal Reserve will continue on aggressive policy tightening path.
Spot gold prices fell 0.2 percent to $1,698.14 per ounce, as of 0120 GMT.

At 9:56am, gold contracts were trading 0.19 percent lower on the Multi-Commodity Exchange (MCX) at Rs 50,045 for 10 grams and silver was down 0.76 percent at Rs 56,377 a kilogram.

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Tapan Patel, Senior Analyst (Commodities), HDFC Securities

Gold prices traded steady on Wednesday with spot gold prices at COMEX were trading flat near $1702 per ounce in the morning trade. Gold prices held above $1700 per ounce after correcting over stronger dollar following spike in US inflation. The dollar index rebounded on expectations of larger rate hike from US Fed in upcoming meeting.

We expect gold prices to trade sideways to down for the day with COMEX Spot gold support at $1680 and resistance at $1720 per ounce. MCX Gold October support lies at Rs 49800 and resistance at Rs 50500 per 10 grams.

Ravindra Rao, CMT, EPAT, VP- Head Commodity Research at Kotak Securities

COMEX gold trades modestly lower near $1712/oz weighed down by recovery in the US dollar and higher bond yields in reaction to US inflation data. A slightly bigger than expected rise in consumer prices rekindled worries that the Fed may continue with aggressive rate hikes.

The Fed is largely expected to raise interest rate by 0.75 percent in the coming week and market players now expect Fed to continue with aggressive hikes going ahead. Gold witnessed a sharp rebound which ran out of steam close to $1750/oz level and prices may remain under pressure as focus shifts to upcoming Fed meeting.

Rahul Kalantri, VP Commodities, Mehta Equities

Gold and silver prices fell sharply on Tuesday on the back of a strong US inflation data that also sent the dollar index and bond yields higher. After the US CPI data, the dollar index took a U-turn and gained more than 1% and recovered from one month lows. The dollar index crossed 109.50 marks and pushed precious metals lower. The U.S. 10-year bond yield also surged and at the time of writing this report it was trading above 3.44%. After the US CPI data, the fallout in the financial markets was profound running across almost every asset class.

Gold has support at $1696-1682, while resistance is at $1718-1726. Silver has support at $18.78-18.55, while resistance is at $19.28-19.45. In rupee terms gold has support at Rs 49,940-49810, while resistance is at Rs 50,380–50,540. Silver has support at Rs 56,050-55,640, while resistance is at Rs 57,180–57,610.

Nirpendra Yadav, Senior Commodity Research Analyst at Swastika Investmart

US dollar, which moves opposite to gold prices, gained 1% after the US CPI data stood better than expected. However, rising inflation supports gold prices, but the US fed has signaled an aggressive outlook toward the monetary policy until inflation comes below its target levels of 2%. Higher inflation increases the expectation of a more aggressive Monetary policy which puts pressure on precious metals. Today's trend in bullion may remain down. Gold has resistance at Rs 50300 and support at Rs 49900. Silver has resistance at Rs 57700 and support at Rs 56000.

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