The recent interest rate hike by the US Federal Reserve which has strengthened the US bond yield is a key reason behind the present subdued rates of gold globally and in India. Indian gold rates are decided based on global prices, as the country has to import a significant amount of gold to meet the domestic demands. In addition to that, the US Dollar graph drives the gold rates as the yellow metal is a dominant asset class. In the last week, the US Dollar surged significantly compared to other currencies, leading to a falling gold market. Gold rates on May 11 have dropped by around Rs. 350-380/10 grams in India. The 22 carat gold rate is quoted at Rs. 46750, and 24 carat gold rate is quoted at Rs. 51,000 in the Indian markets.
Falling gold rates have always been lucrative for India's retail investors. Earlier, in March, gold prices were bullish and gold demand fell sharply. According to the World Gold Council, in China, a similar trend was also observed. Be it gold ornaments, digital gold or gold ETF, all the prices depend on the domestic gold rates, fixed by the IBJA. So, with a falling rate, it can be a good time to buy gold. In the Indian markets, in the past 2 days, gold rates have dropped around Rs. 750, making the investment profitable for the long term. However, investors should follow the upcoming CPI inflation data in the US which will further move the gold rates in global and Indian markets.
Commenting on the gold rates trend, Australia and New Zealand Banking Group (ANZ), said, "We see the short-term key support level being USD1,850/oz. Should it break below this, prices could easily retreat to USD1,800/oz. Aggressive monetary tightening, rising yields, and a stronger (US) dollar are key drags for the gold prices."
Today, the Comex gold futures were quoted at $1850.60/oz, gaining by 0.52%, from the last trading day. Yesterday it was last quoted at $1841.0/oz. The spot gold prices are quoted at $1853.40/oz, gaining by 0.78%, from the last trading day. On the other hand, the US dollar index in the spot market stood at 103.39, falling by only 0.53%. In India, the MCX gold in June future was quoted at Rs. 50,689 grams, gaining by 0.20%, from the last trading day.