Gold prices were firmed as the dollar and treasury yields weakened after the U.S. inflation data, although bullion was not far from a near three-week low in the previous session. 
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Gold prices were firmed as the dollar and treasury yields weakened after the U.S. inflation data, although bullion was not far from a near three-week low in the previous session. Gold prices opened on the Multi Commodity Exchange (MCX) on Thursday at Rs 59,004 per 10 grams and hit an intraday low of Rs 59,004. In the international market, prices hovered around $1,909.40 per troy ounce. Meanwhile, silver opened at Rs 71,160 per kg and hit an intraday low of Rs 71,118 on the MCX. The price hovered around $22.75 per troy ounce in the international market.
Anuj Gupta, Head of Commodity and Currency at HDFC Securities, said that yesterday, gold prices corrected by 0.06% and closed at 58593 due to no fresh buying interest in the market. However, the expectation of an increase in interest rates by the FOMC is also putting pressure on gold. The market is awaiting US Economic data and FOMC decision on interest rates. We also noticed some profit booking in the dollar index from higher levels."
In the international market, gold is trading at $1910 levels. For trading, gold may trade between $1900 to $1920 levels; on MCX, it may trade between 58300 to 58800 levels with mixed to down Trend broadly, added Gupta.
Gold prices were firmed as the dollar and treasury yields weakened after the U.S. inflation data, although bullion was not far from a near three-week low in the previous session.
Manav Modi, Analyst, Commodity and Currency, MOFSL, said, "The U.S. dollar index and 10-year Treasury yields eased after U.S. consumer prices increased by the most in 14 months in August as the cost of gasoline surged, but the annual rise in underlying inflation was the smallest in nearly two years."
On an annual basis, US CPI was reported at 3.7%, up from 3.2% in July, while the Core CPI remained unchanged at 4.3%. Bets for a pause in the September Fed meeting increased to 97% and 60% in November after the Inflation data.
Modi said, "Fed officials are hoping for evidence of a clear decline in inflation and a slowing economy. Some signs were witnessed in the past few sessions, but likely not enough to downplay the possible need for further rate increases later this year. The European Central Bank is set to decide today whether to raise its key interest rate to a record peak or take a break as the economy deteriorates. Focus today will also be on the US PPI, retail sales and weekly jobless claims data."
Spot gold closed with a loss of 0.22% at $1909.07.
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Praveen Singh, Associate VP, Fundamental Currencies and Commodities, Sharekhan by BNP Paribas, said, "The US CPI inflation data (August) showed that the US core CPI inflation m-o-m rose 0.30% Vs the forecast of 0.20%, thus registering the first increase in six months, whereas the headline CPI inflation y-o-y was up 3.70% as against the forecast of 3.60%. Core CPI inflation increased 4.30% y-o-y and headline inflation was up 0.60% m-o-m, thus both these data matched the forecast. However, a 0.60% rise in m-o-m reading, led by gasoline, rent, new cars and shelter, amounts to near 8% inflation on y-o-y basis, which is uncomfortably high. The CPI reading has risen for two straight months on y-o-y basis."
As such, the US inflation report doesn't alter the view that the US Federal Reserve is likely to be in 'wait and watch ' mode in near future, which means no rate at September FOMC meet; however, the report does indicate a sticky inflation scenario that means that probability of a rate hike later this year has increased.
Singh, "The US yields initially jumped on the inflation report before settling lower in a counter-intuitive move. Gains in treasuries could be attributed to normalisation after corporate bond issuance led surge. Two-year US yields eased by 5 bps, whereas tens were lower by 3 bps."
Gold is expected to be range-bound with a slight bearish bias ahead of the US retail sales data and the European Bank monetary policy.
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