Gold Rates Losing Momentum, How Did US Inflation Rate At 6.3% Gain (YoY) Influence?

Globally gold markets are losing momentum. In the futures markets, gold rates have been moving around $1840-$1865/oz, in the past three days. Investors were waiting for the US inflation data, which has been recently published by the government. An inflation gauge closely tracked by the Federal Reserve has increased 6.3% YoY in April. It has slowed down the first time, since November 2020. However, the inflation data, in the said month stayed below the 40 years high level, after being above it for a long time.

Additionally, according to reports, "Consumer spending rose by a healthy 0.9% from March to April, outpacing the month-to-month inflation rate for a fourth straight time. On a month-to-month basis, prices rose 0.2% from March to April, down from the 0.9% increase from February to March." Earlier, the CPI inflation had hiked 8.3% in April from a year earlier, down from a 40-year high in March of 8.5%.

Gold is considered a hedge against inflation. So, investors are much concerned that how will this inflation data might impact the gold markets. The US Fed is trying to control the inflation rate by raising the interest rate. Investors were also concerned that the Fed might not hike the interest rate further, as the inflation rate slowed down a bit. But, Jerome Powell, Chairman, US Fed commented that the key short-term interest rate until inflation is "coming down in a clear and convincing way." So, for the time being investors can expect that gold will be moderate in the international markets. Further, the US Fed's policy meeting and the decision about interest rate hike can influence the gold rates. The interest data will also leave some impacts on the US bond yields.

Gold rates in Indian and international markets

In the Indian domestic markets, the 22 carat gold rate is quoted at Rs. 47,850 gaining by Rs. 100, and the 24 carat gold rate is quoted at Rs. 52,200/10 grams, gaining by Rs. 110, as fixed by the IBJA. The Comex gold futures were quoted at $1851.90/oz, gaining by 0.32%, from the last trading day. Yesterday it was last quoted at $1851.30/oz. The spot gold prices were last quoted at $1856.90/oz, gaining by 0.10%, from the last trading day. The US dollar index in the spot market stood at 101.59, falling by 0.11%. In India, the Mumbai Commodity Exchange (MCX) gold in June future was quoted at Rs. 51,149/10 grams, gaining by 0.19%, from the last trading day.