Gold rates in the international markets are highly volatile at the present market, as US Consumer Confidence data was released on Tuesday. Gold rates at some point crossed the $1808/oz level yesterday but dropped below $1773/oz when the market closed. Additionally, the US dollar also drops to a one-week low level.
US Consumer Confidence
The US Consumer Confidence Index fell 2.1 points to 109.5 in November, which is down from 111.60 in October. The Expectations Index fell to 87.6 from 89 in the earlier month, and the Present Situations Index dropped to 142.5 in November from 145.5 in October. The most significant reason behind this fall was the surging inflation rate in the country, and the common consumers are expected to exhibit lesser demand in the upcoming 6 months.
Volatile gold rates
A surging inflation rate, which is at the highest level in more than the last 30 years, is helping the gold rates to move upwards in the global markets. So, after the US Consumer Confidence data was published, investors became bullish and gold rates hiked immediately. Gold prices mostly stayed above the $1805/oz level, in the Comex. However, the gain did not stay for long.
Jerome Powell is Hawkish about inflation
Another reason, gold rates are volatile in the market is that US Fed Chairman Jerome Powell is certainly Hawkish about inflation. At the US Senate Banking Committee, he said, "It is difficult to predict the persistence and effects of supply constraints, but it now appears that factors pushing inflation upward will linger well into next year." However, he believes that the economy continues to strengthen, while the labor market is improving along with the wages. By Powell's statement, investors mooted that the Fed might take up a comparatively tighter monetary policy to control inflation rate under 2%, as said earlier.
Additionally, he said that the Fed is committed to their price stability goal, and to 'prevent higher inflation from becoming entrenched'. So, if inflation stays under control next year, the gold rates are expected to fall at that time.
Indian gold rates
In line with that global trend, the Indian gold rate will also drop in the domestic markets. At present, 22 carat gold rate in India is quoted at Rs. 47110/gram and 24 carat gold rate is quoted at Rs. 48110/gram on December 1. IBJA is trying to keep the gold rates moderate to increase gold demand in India during this wedding season.