Gold Prices Plunge as US Inflation Data and Hawkish Fed Stance Weigh Heavy

Gold prices took a hit this week, falling nearly 1.86% as investors reassessed their outlook for interest rates following stronger-than-expected US inflation data and hawkish signals from Federal Reserve Chair Kevin Warsh.

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 from Monday's opening price of ₹1,62,603.

Initially, gold had rallied amid concerns over currency debasement and US Treasury support for longer-dated bonds. However, this momentum faded after fresh economic data showed resilience in the world's largest economy.

The July US personal consumption expenditures inflation came in at 3.7% year-on-year, while labour and trade indicators pointed towards sustained growth. Warsh's hawkish speech at the Jackson Hole symposium further dented sentiment, causing gold to plunge around $70 within minutes of his remarks before recovering some losses.

Expectations of a September rate hike increased, with projected year-end rates climbing to their highest level in three weeks. Silver followed gold's volatile trajectory, retreating after touching a 10-week high during the week.