Gold Prices Fall By Rs 300, Hit 2-Month Low In India On US Fed Concerns

Gold rates in India fell by Rs 300 following reports that the US Federal Reserve is likely to hike interest rates two more times this year. Gold in the international markets fell to $1945 an ounce, dragging prices in India lower as well. Gold rates are sensitive to interest rates and any indication of higher interest rates, tends to impact prices of the precious metal. Spot gold in the Indian markets dropped by Rs 300 to Rs 5470 for 22k, while 24k gold was trading a Rs 5967 per gram in the city of Mumbai. In Chennai gold for 22k was trading at Rs 5505 per grams, while in Bangalore spot gold was at Rs 5475 per gram.

According to Colin Shah, Managing Director, Kama Jewelry gold prices were trading with mixed cues till the Fed announced its monetary policy on Wednesday. "The Fed holding rates were very much on expected lines, but the commentary indicated at least 2 more rate hikes in the current cycle. This led to a rise in The dollar index to near 103 level thereby making it expensive to buy gold.

Gold prices have hit a 3-month low internationally and a 2-month low domestically. Despite the fall, gold has posted more than 7% returns YTD in INR terms. Moving forward, we expect gold prices to be stable, a recession - mild or strong in the US may lead to US Fed softening its stance, thereby pushing up the gold prices. Gold prices are likely to find support at $1,930 (Internationally) and INR 58,500 (Domestic market),' says Colin Shah, Managing Director, Kama Jewelry on gold prices hitting a 3-month low," he stated.

Going ahead, it is possible that gold would continue to track data coming from the US, including payrolls data, consume price inflation data, which would be key data points for the US Fed to act.