Yellow Metal Prices Are Likely to Remain Pressure After High CPI Inflation Data in The United States

On Wednesday, prices of gold stayed just above the USD 1,700 mark being under stress after the U.S. inflation data hinted strong dollar return in the approaching weeks.

Spot gold landed at approximately USD 1,701.87 per ounce, during which the gold estimates for December fell by 0.3 percent to USD 1,712.25 each ounce by 19:21 ET (23:21 GMT).

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The prices of high-quality gold (bullion) dipped on Tuesday after the data reported portrayed a higher than anticipated U.S. consumer price index in August, solidifying the projections of the Federal Reserve will not stop intensifying this year. Spot gold prices were less than USD 1,700 reaching a level that was the focal point of aid for the yellow metal this year.

According to analysts, there is a looming fear of losses in gold to intensify deeply if the prices hit below the USD 1,700 mark.

After the data disclosed by CPI dollar made a strong comeback by leaping 1.7 percent on Tuesday, returning to its close 20-year highs, which led to additional stress on metal prices.

There were hesitations among investors that refrained from doing big gold trades before next week's Fed meeting, where the interest rates are projected to rise by 75 basis points according to the central bank. For the November meeting inflation is expected to spur a matching hike.

Due to the strong dollar stance on Wednesday, other precious metals went under pressure including a dip of 0.9 percent for silver and a 0.2 percent loss in platinum.

Gold along with other precious metals has taken a substantial hit from their respective peaks during the beginning of the year as there was a notable rise in the interest rates which led investors to strive for more promising yields in the sovereign and dollar debt.

Focusing on industrial metals, prices of copper were down low on Wednesday, following the 2 percent dip in the previous session. The high dollar rate was the main factor leading to these losses.

Red metal witnessed a rise in prices during the past few sessions as a tight supply stemming was expected by the traders caused by a work stoppage at the world’s biggest copper mine Chile’s Escondida.

Though globally an economic slowdown particularly when the interest rates rise is likely to leave a dent in the demand triggering a tight supply.

India Gold Prices

As the U.S. inflation data was recorded in the international markets and a boost in the dollar was witnessed, the gold prices plummeted lower with an anticipated policy tightening by the Federal Reserve.

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Gold was trading at a 0.19 percent dip below the Multi-Commodity Exchange (MCX) which came to around USD 630 (INR 50,045) for 10 grams while silver on the other hand was trading 0.76 percent below at about USD 710 (INR 56,377) a kilogram.

According to the Procurement Resource, the recorded U.S. inflation in the international market has led to a rise in gold prices effecting the rates of other precious metals. The measures of policy tightening by the Federal Reserve is likely to continue in the approaching weeks focusing on maintaining strong dollar value.