Gold Rates Traded Slightly Down In 3rd Week Of November: What Is The Trend?

Gold rates trend

From the first day of the month to the 12th day, gold rates jumped from around $1670/oz to around $1879/oz. However, in the past three days, gold rates performed moderately and did not hike. Today, on November 19, gold rates dropped to around $1655/oz in the Comex December gold futures. 22-carat gold prices in India Rs. 46740/10 grams to Rs. 48,740/10 grams from November 1 to November 17. However, in the last 2 days, gold stayed flat.

Earlier in this month, after USA's Consumer Price Index data was published stating a 6.2% inflation rate, gold rates started to gain immediately. But this week has not been a major trading week for the yellow metal.

Wealth preservation

Concerning wealth preservation, all assets classes play significant roles in the economy. Investor and analyst Gary Wagner, editor of TheGoldForecast in an interview with Kitco News told, "I am not claiming that gold is the best investment in terms of returns, it is not. But i believe it is the best assets class in terms of making a choice between keeping a large amount in dollar or having some of that in gold." Inflation is a major driving force behind gold rates now. With a higher inflation rate, investors would follow the gold markets to invest more, and the prices will go up.

Impact of inflation

Wagner additionally mentioned, "Will we see supply chain bottlenecks ease out of the market?...what type of rate of inflation do we have? Food is not controlled by things like bottlenecks, rather it is by demand. I believe some of it (inflation) is transitory, while I believe some of it is sticky, sustainable. The question is how long will it last? The longer it (inflation) lasts, the higher the probability that gold will challenge $1920." Later he said, "A break above $1,880 (gold price) would really signal another breakout and we would push towards $1,990."

Generally, after a dynamic rally of an asset, it might have a correction in price or a price consolidation. Wagner thinks, "The current price consolidation in gold indicates that the precious yellow metal is potentially forming a base at this new higher level and awaiting the set of next fundamental events."

Monetary policy

However, today Atlanta Federal Reserve Chairman Raphael Bostic has commented that he expects the country's monetary policy to be normalized by next summer, that is mid-2022. This indicates again that the economists are not thinking to hike their interest rate any time soon. So, it is expected that gold rates will remain on the verge of gain, and can reach $1,900/oz.