Gold Rate Under Pressure This Weak, But "Hedge Against Stagflation", Says Analyst

Tomorrow, the US Federal Reserve will decide about its next monetary policy measures. The Fed is stepping up aggressively against inflation, which stood at 8.3% in August. The Fed's aim to restrict inflation within 2% is being failed, and Fed Chair Jerome Powell is expected to be more hawkish against inflation in this FOMC meeting. Fed can hike rate by 75 bps, traders are expecting. Hence, markets are volatile this week. Both commodities and stock markets are under pressure. Bold gold and silver rates are falling now, ahead of the US Fed meeting.

However, "Gold is not an inflation hedge, but rather a hedge against stagflation and a hedge against investors losing faith in government and currencies," told analyst David Erfle, Founder of JuniorMinerJunky,com to Kitco News. Erfle added, "Investors still believe the Federal Reserve has a handle on things," he said. "I'm expecting a 75 basis point hike [at the Fed's next meeting]. If it's a 75 basis point hike, it could be a buy-the-news situation as far as the gold price is concerned...(The domestic political situation) is ripe for a trigger to spike the gold price, because the bearish side of the market is so overcrowded." He has also mentioned that after the next Fed meeting, gold could see more buying as investors 'scoop up some cheap gold', Kitco reported.

Indian gold rates are also showing a similar trend to global markets. Indian gold rates are dependent on global prices. The yellow metal in India is being quoted at around a 6-months low level. Today, on September 20, the 22 carat gold rate is quoted at Rs. 45,950, and the 24 carat gold rate is quoted at Rs. 50,130/10 grams. Indian silver rate stood at Rs. 5720/100 grams, today.

Today, the Comex gold futures were quoted at $1,678.60/oz, up only by 0.02%, till last traded. Yesterday it was last traded at $1,678.20/oz. Till today, the yellow metal fell by 8.69% this year in the futures market. The spot gold prices were last quoted at $1669.90/oz, down by 0.48%, from the last trading day. The US Dollar index gained to 109.81, till last traded. Today, in India, the Mumbai Commodity Exchange (MCX) gold in October future is quoted at Rs. 49260/10 grams, down by 0.09%, from the last trading day. The MCX silver in December future is quoted at Rs. 56672/10 grams, down by 0.02%, from the last trading day.