Gold and silver prices opened higher on the Multi Commodity Exchange (MCX) on Wednesday as market participants adopted a cautious stance ahead of the release of the US Personal Consumption Expenditures (PCE) price index. The data, due later today, is the Federal Reserve's preferred gauge of inflation and could provide fresh signals on the path of interest rates.
October gold futures on the MCX gained Rs 320 to settle at Rs 1,63,202 per 10 grams at the open. September silver futures rose Rs 2,053 to Rs 2,46,180 per kilogram.
Focus on US inflation data
The PCE price index is closely watched by traders because it influences the Federal Reserve's monetary policy decisions. A higher-than-expected reading could reinforce expectations that the Fed will maintain or increase interest rates, which typically weighs on gold prices by raising the opportunity cost of holding the metal. Conversely, a softer print might bolster hopes for rate cuts, providing support for gold.
Markets are currently pricing in a range of scenarios for the Fed's next move, and the PCE release is expected to narrow that range. The data covers July and will be released at 12:30 GMT (18:00 IST) on Wednesday.
MCX price levels
On the MCX, October gold futures opened at Rs 1,63,202, up from the previous close of Rs 1,62,882. Silver for September delivery opened at Rs 2,46,180, compared with the prior close of Rs 2,44,127. Both metals had seen some selling pressure in recent sessions, and the modest rebound reflects a wait-and-see mood ahead of the data.
For the latest prices, traders can track the live gold price on GoldRate.info.
Key takeaways
- October gold futures on MCX rose Rs 320 to Rs 1,63,202 per 10 grams.
- September silver futures gained Rs 2,053 to Rs 2,46,180 per kilogram.
- Investors are awaiting the US PCE inflation data for clues on the Federal Reserve's interest rate path.
Common questions
What is the PCE price index?
The Personal Consumption Expenditures price index measures the change in the prices of goods and services purchased by consumers. It is the Federal Reserve's preferred inflation measure because it accounts for changes in consumer behaviour and covers a broader range of expenditures than the Consumer Price Index (CPI).
Why does gold react to inflation data?
Gold does not pay interest or dividends, so its attractiveness relative to yield-bearing assets is affected by interest rates. Inflation data influences expectations for future interest rate changes. If inflation is high, the Fed may raise rates, making bonds and cash more attractive and reducing demand for gold. If inflation is low, rate cuts become more likely, which can support gold prices.
The direction of gold and silver prices in the near term will depend on the PCE data release. A significant deviation from expectations could trigger a sharper move in either direction.