Gold price rises 1% in global market as cooling US inflation boosts Fed rate cut hopes; check local rates

After a steep slide throughout most of the week, gold prices marked a recovery on Friday, settling nearly 1% higher in the global market after the United States released inflation data for June.

Spot gold soared to $2,390.43 an ounce during the day's trading session, which was up 1.01% as against the last closing price. The metal settled at $2,387.07, up 0.95% from the previous session's close.

The US gold futures also climbed, with the August contracts settling 1.37% higher at $2,385.7 an ounce on the Commodity Exchange Center (COMEX).

On India's Multi Commodity Exchange (MCX), where the impact of US inflation data on gold may be felt on Monday, the metal closed flat at ₹68,160 per 10 gram.

Notably, spot gold had peaked to an all-time high of $2,482.29 per ounce last week, but the price nosedived after US President Joe Biden marked an end to his re-election bid. His exit from the White House race was followed by a jump in the dollar's value, which in turn led to a plunge in the value of gold.

Fed rate cut hopes

On Friday, gold rose in the global market as the fresh set of data released by Washington showed inflation cooling in the world's largest economy. This sets the stage for a likely reduction in the benchmark lending rates by the US Federal Reserve.

The personal consumption expenditures (PCE) price index rose by 0.1% month-on-month in June, as per the data released by the US Commerce Department. This was in line with the analysts' expectations.

On a yearly basis, the PCE was up 2.6%, the same as in May. Core inflation for the three-month period ending June slowed to 2.3%, marking a sharp drop as compared to 2.7% in the February-May period.

The data may nudge the US Federal Reserve, which has set a target of achieving 2% inflation, to begin reducing the lending rates which are at a historic high.

A lower interest rate augurs well for the gold market, as more liquidity into the economy increases the demand for the yellow metal which is seen as a hedge against inflation.

What are the gold rates in Indian cities?

In New Delhi, the rate dropped by 1.82% to ₹69,387. Kolkata also witnessed a decline of 1.24%, as the metal was trading at ₹69,796 per 10 gram in the city.

Amid the global uncertainties, analysts see the demand for gold to remain strong in the medium-to-long term. The price could peak to $3,000 an ounce in the international market, as per a forecast released by Citi Research in April.