Gold Prices Surges Globally, As US Inflation Rate Rises 40 Years High

CPI Inflation in the US has surged to 6.8% in November YoY, indicating a huge price hike for food, energy, housing, etc. This is the highest inflation rate recorded in the past 40 years, since 1982. The US government also reported that from October to November, prices have jumped by 0.8%. This exceedingly high inflation rate will certainly impact global gold rates, pulling the bullish string again.

Gold is a US Dollar dominated assets class and highly influenced by the US economic developments. So, any employment data, manufacturing or industrial output data, the inflation rate in the country, impacts on the gold prices. A higher inflation rate helps the gold price to rally.

Yesterday, in the Comex, gold rates were quoted at $1774.6/oz, and the rates have surged by 0.47%, and quoted at $1783/oz, till last traded. In the spot market, after the US CPI data publication, gold rates jumped to $1791.3/oz, eased later. Analysts are expecting this trend to continue, as this is an unprecedented incident for the gold market.

With economic tension and uncertainty, assets classes always perform well. Gold, as a precious metal, reacts the same way. In the last year, due to the pandemic, gold rates surged to around $2000/oz in August, but somehow the metal could leave behind the worries of economic slowdown. In December 2021, gold rates started to remain flat. However, today's announcement of the headline inflation data is expected to move the gold rate again.

Now, gold market analysts are waiting for the next US Fed meet in the upcoming week. It will give an idea about how is the Fed planning to keep the inflation rate under control. The Fed earlier stated to restrict the inflation at 2% but failed every month, and economists are anticipating that this rate will surge further. Fed's monetary policy of low-interest rate and liquidity infusion is, according to the reasons behind this inflation. Gold traders are gaining from this, as the rates are getting bullish. Without an adequate monetary policy against inflation from the Fed, next week will further increase the gold rates globally.

In India, 22 carat gold rates are now quoted at Rs. 46850/10 grams and 24 carat gold rates are quoted at Rs. 47850/10 grams. Indian gold rates are dependent on international gold prices. So, any gain in gold rates globally will again increase the gold rates in the Indian domestic markets. If the inflation does not stay under control, the gold rates in the international market can cross $1900/oz in the next year. Analysts are now waiting for Jerome Powell's statement about the same.