Gold Rates Fall Above Rs. 1000 In India, Ahead Of US Fed Meet: Invest Now?

Indian gold rates, this month has mostly been under pressure and on June 14, the yellow metal has fallen above Rs. 1000/10 grams in the domestic markets. Today, the 22 carat gold rate is quoted at Rs. 47,400 gaining by Rs. 960, and the 24 carat gold rate is quoted at Rs. 51,710/10 grams, gaining by Rs. 1050.

The major reason behind this sharp fall is tomorrow's US Federal Reserve meeting. Investors are anticipating that the US central bank will hike the interest rate by around 50 bps, leading to higher government bond yields. The US Fed has been raising the interest rate in order to squeeze the high headline inflation rate, which increased to 8.6% YoY in May. According to the country's Labor Department in April the inflation rate increased 8.3% YoY. Hence, this month-on-month gain in consumer prices is dampening the country's economy, along with the corporates' profitability.
Already the US bond yields are gaining, giving higher profit margins to investors. Now, this anticipated interest rate hike will again push this up. Eventually, investors will flock toward the bonds, leading to a bearish market for gold.

However, falling gold rates always help the retail gold sales in India, investors are looking forward to this. This month India is not experiencing any festive or wedding season. So, the market is marginally down. Considering this fall in the gold rates, jewellers are hoping for better sales now.

The Comex gold futures were quoted at $1831.40/oz, surging by 0.02%, from the last trading day. Yesterday it was last quoted at $18312.80/oz. The spot gold prices were last quoted at $1831.60/oz, surging by 0.65%, from the last trading day. The US dollar index in the spot market stood at 104.94, plunging by 0.18%. In India, the Mumbai Commodity Exchange (MCX) gold in August future was quoted at Rs. 50,625/10 grams, falling by 0.08%, from the last trading day.