Gold Prices Plunge as Fed Hawkishness and Strong US Inflation Data Offset Earlier Gains
Gold prices took a hit this week, falling nearly 1.86% as investors reassessed their expectations for interest rates in light of strong US inflation data and hawkish signals from Federal Reserve Chair Kevin Warsh.
The MCX October gold futures dropped 1.63% to ₹1,56,400 on Friday, while September silver futures declined 1.66% to ₹2,36,651 per kg. The price of 24-carat gold also fell to ₹1,59,578 per 10 grams, down from ₹1,62,603 at the start of the week.
The bullion had rallied earlier in the week due to concerns over currency debasement and US Treasury support for longer-dated bonds. However, fresh economic data showed that the US personal consumption expenditures inflation came in at 3.7% year-on-year, strengthening expectations that interest rates could remain elevated for longer.
Warsh's speech at the Jackson Hole symposium further dented sentiment, causing gold prices to plummet by around $70 before recovering some losses. The hawkish tone of his remarks increased expectations of a September rate hike and boosted projected year-end rates to their highest level in three weeks.