Gold Slips After US Inflation Data; Focus Shifts to ECB Rate Decision

Published on Sep 14, 2023 14:23

Gold slipped below $1,930 per ounce, as investors reacted to the latest US consumer inflation report, which had limited impact on Federal Reserve monetary policy expectations. The report revealed that the annual headline inflation rate in the US had risen for the second consecutive month, reaching 3.7% in August. However, the more crucial annual core inflation figure eased to 4.3% in August, down from July`s 4.7%.

Market participants are concerned that potential upward pressures on headline inflation might increase the likelihood of a final interest rate hike by the Federal Reserve (Fed) later in the year. This suggests that the US economy could endure a period of stringent monetary policy, with the Fed expected to maintain higher interest rates for an extended duration. While the US labor market remains stable, it may face challenges as businesses prioritize cost control and efficiency.

Apart from the inflation data, gold prices are expected to respond to the European Central Bank`s (ECB) interest rate decision later in the week, adding further dynamics to the market.

MCX bullion futures for October delivery slipped to as low as Rs 58411 so far in the session today, down Rs 128 per 10 grams. The metal should find support in the range of Rs 58300-100 levels.