Summary:
Gold prices remained largely steady after US inflation data came broadly in line with expectations. Softer PPI and easing Treasury yields supported precious metals, while uncertainty around Fed policy and the Iran conflict remained key risks. In the longer term, strong central-bank buying, recovering ETF demand and a potentially weaker dollar continue to support gold. Technically, gold is holding near ₹1,40,000, with resistance around ₹1,56,000–₹1,65,000.
Gold prices stayed flat throughout last week as the US released its much-awaited inflation data. Consumer Price Index (CPI) data came in on Wednesday, followed by Producer Price Index (PPI) data on Thursday.
CPI came in exactly in line with consensus; headline inflation rose 3.4% year-on-year and 0.1% month-on-month, while core CPI (which excludes food and energy) rose 2.5% year-on-year and 0.2% month-on-month. Core PPI, on the other hand, came in slightly softer than forecast, growing just 0.2% MoM against expectations of 0.3%, while headline PPI was flat at 0% MoM.
This was a closely watched release, as inflation has become a central talking point for the Federal Reserve, especially since the start of the Iran war. The in-line CPI print calmed some nerves among precious metals traders, who had worried that elevated energy prices would push up the broader commodity basket and force the Fed into a faster pace of rate hikes than currently priced in.
Check Out: US CPI & PPI Cools-Impact on Gold Rate, Dollar &Fedwatch
CME FedWatch: Shift in Target Rate Probabilities
| Target Rate Range | 16th Sep Pre-Data | 16th Sep Post-Data | 28th Oct Pre-Data | 28th Oct Post-Data | 9th Dec Pre-Data | 9th Dec Post-Data |
|---|---|---|---|---|---|---|
| 3.50–3.75% | 54.00% | 69.20% | 40.70% | 55.60% | 24.50% | 37.80% |
| 3.75–4.00% | 46.00% | 30.80% | 48.00% | 38.30% | 45.10% | 43.80% |
| 4.00–4.25% | - | - | 11.20% | 6.10% | 25.90% | 16.40% |
| 4.25–4.50% | - | - | - | - | 4.50% | 1.90% |
Market Reaction
Precious metals mostly traded sideways following the data. The dollar also held flat, while US Treasury yields eased modestly; short-term yields dipped slightly, but the long end stayed largely unmoved.
Going ahead for Precious Metals:
Short-Term Factors:
Most of the major economic releases for the month, Non-Farm Payrolls and inflation data, are now behind us. The remaining catalysts through month-end are the FOMC Minutes and the second estimate of Q2 US GDP (preliminary GDP revision).
Beyond scheduled data, any developments that either prolong or de-escalate the Iran war will remain a key swing factor for gold, with higher energy prices posing the main risk to market sentiment.
Fed Governor Kevin Warsh has repeatedly pledged price stability since his nomination, and the central bank's inflation record adds weight to that stance the Fed has missed its 2% target for five consecutive years. At the July FOMC meeting, 3 of 12 Fed presidents dissented in favor of a 25 bp hike rather than holding rates steady, and officials have since reiterated concerns over renewed price pressures and their willingness to raise rates if necessary.
Higher interest rates continue to work against non-yielding assets like precious metals, keeping gold sensitive to any hawkish repricing.
Longer Term Factors:
Beyond immediate challenges, the structural gold story remains intact. Central bank buying led by Poland, which brought about 82 tonnes, followed by Uzbekistan (41.4 tonnes) and China (40 tonnes). Chinese PBOC, in fact, has sped up buying of gold in recent months. Strong central bank buying has provided good support for prices.
Investment demand has rebounded this month after two months of outflows. We saw a rebound especially in European and Asian gold ETFs; North America also returned to positive territory. As prices stabilise, we could see a rebound in ETF demand all over.
Dollar Index is also finding it hard to stay above 101.50 - 102 levels. In the past few weeks, it has crawled below 100, and it looks like the Dollar Index could weaken. Countries continue to diversify away from Dollar assets. A weaker Dollar is positive for Gold.
Also Read About: How Gold Demand Is Changing: ETFs, Recycling
Conclusion:
Gold prices have tried to make a bottom near 140000 and have technically created a wedge-type pattern. Until and unless it crosses below 140000 again, prices are likely to stay in positive territory. Immediate resistance is near 156000 - 160000 - 165000.
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