Gold prices remain stable ahead of US inflation data; traders watch Fed rate signals closely

Gold prices held steady on Thursday, August 28, as investors awaited crucial US economic data later in the week, which could shed light on the Federal Reserve’s interest rate trajectory. As of 0257 GMT, spot gold was trading at $3,390.27 per ounce, after briefly reaching its highest level since August 11 earlier in the session. US gold futures for December delivery remained largely unchanged at $3,447.40 an ounce. In India, gold was priced at Rs 1.02 lakh per 10 grams for 24 karat, Rs 94,050 per 10 grams for 22 karat, and ₹76,950 per 10 grams for 18 karat, according to Goodreturns.

Fed Reserve policy expectations

Investor attention is sharply focused on the US Personal Consumption Expenditures (PCE) Price Index, which is scheduled for release on Friday, August 29. This index is the Federal Reserve’s preferred measure of inflation. Economists predict a 2.6% increase in July, the same as the previous month. With the CME FedWatch Tool indicating an 88% probability of a 25-basis-point rate cut in September, traders are seeking data that could push gold prices above the $3,400 mark. Kyle Rodda, an analyst at Capital.com, noted, “We’re really looking for something more to push the price above the critical level of $3,400 … the US PCE data will be super significant. We are still bullish on gold.”

Currency movements and tariffs

Gold has benefited from a weaker US dollar, which tends to make bullion more attractive to overseas investors. At the same time, the Indian rupee’s decline to record lows against the greenback has added upward pressure on domestic gold prices. Rahul Kalantri, VP of Commodities at Mehta Equities, said, “Gold has support at $3,365–3,345 an ounce and resistance at $3,412–3,434 an ounce.”

Geopolitical and macro-economic factors

Gold has mostly traded within a range since reaching a record high above $3,500 per ounce in April, as the market awaits new catalysts after a strong rally last year and early 2025. Support has come from trade and geopolitical tensions, inflows into exchange-traded funds, and central banks’ moves to diversify away from the dollar.

Global trade tensions and geopolitical uncertainties continue to sustain demand for gold as a safe-haven asset. Traders remain cautious, monitoring not only inflation data but also US employment reports and Q2 GDP figures to gauge the overall economic environment. Darshan Desai, CEO of Aspect Bullion & Refinery, remarked, “In the coming two days, Q2 GDP figures, jobless claims, and PCE inflation data will play a significant role in shaping the future direction of bullion prices.”

Fed Reserve commentary

At the recent Jackson Hole Symposium, Fed Chair Jerome Powell indicated that a rate cut could occur as early as September, contingent on forthcoming economic data. Rick Kanda, Managing Director of The Gold Bullion Company, said, “Powell’s comments caused gold to jump nearly 1%, resuming an upward trend. But there is no guarantee—if inflation rises again or the Fed backs off, gold prices could fall.”

According to Augmont Enterprise, international gold has support at $3,355 per ounce and resistance at $3,485 per ounce, while in India, support is seen at ₹98,500 per 10 grams and resistance at Rs 1 lakh per 10 grams.

Festive season demand

Gold prices are likely to maintain positive momentum as India approaches the festive season, driven by both global and domestic factors, according to Aditya Birla Sun Life AMC, citing World Gold Council data. International gold prices rose over 1% in August to $3,335 per ounce, supported by a weaker US dollar, expectations of a US Federal Reserve rate cut, inflation concerns, geopolitical uncertainty, and tariff developments. Year-to-date, gold has delivered a 28% return in 2025.

In India, domestic gold prices increased 1.6% in August to Rs 99,665 per 10 grams, marking a 31% YTD rise. Rupee weakness narrowed domestic discounts, aligning local prices with global benchmarks. Ahead of the festive season, jewellery manufacturers are restocking, favoring lighter designs. Imports surged to $4 billion in July. Gold ETF inflows remained strong at ₹1,260 crore in July, reflecting gold’s role as an inflation hedge and portfolio diversifier. The RBI’s gold reserves stayed steady at 880 tonnes, about 12% of foreign exchange reserves.