The US Labour department published the headline inflation data that showed the inflation rate has fallen marginally from the last quarter to 8.3% (YoY), in April. For the first time in the past 7 months, inflation has fallen. It is known that gold is a hedge against inflation. With a falling inflation rate, gold has lost strength globally today. The US Fed, the central bank is trying to control the inflation rate by raising the interest rate multiple times. In June, the Fed can again hike the rate by 50bps which can again plunge inflation. However, the gold market will lose momentum again then. Indian gold rates on May 13, have fallen by around Rs. 750/10 grams, and have fallen by Rs. 1050/10 grams in the last 4 days. The 22 carat gold rate is quoted at Rs. 46450, and 24 carat gold rate is quoted at Rs. 50,670 in the Indian markets.
The US Dollar index is now reaching fresh highs which is eventually influencing the gold market negatively. The yellow metal is traded against the US dollar, and the present surge is dragging the yellow metal's rates down. So, some analysts are now commenting that the gold market is in the 'danger zone'. TD Securities strategists stated, "Substantial selling flow continues to weigh on the yellow metal at a time when liquidity is scarce."
About the current gold market, OANDA senior market analyst Edward Moya said, "The dollar has firmly put gold in the danger zone and a break of the $1,800 level could lead to further technical selling. Gold can't attract any attention until this move in the dollar ends. Right now, Treasury yields and the stock market are both declining, which should suggest we are getting close to a capitulation with this de-risking moment on Wall Street. If gold breaks below the $1,800 level, technical selling could support a drop towards $1,750."
Today, the Comex gold futures were quoted at $1819.80/oz, falling by 0.26%, from the last trading day. Yesterday it was last quoted at $1824.60/oz. The spot gold prices are quoted at $1822.70/oz, falling by 0.01%, from the last trading day. However, the US dollar index in the spot market stood at 104.56, falling by 0.20%. In India, the MCX gold in June future was quoted at Rs. 50,065 grams, gaining by 0.22%, from the last trading day.