Indian Gold Market Trend: Impacts Of The East European Geopolitical Tensions

Indian gold rates are marginally bullish today, as the east European geopolitical tensions are going on. In the domestic markets, the yellow metal's rates have gained by around Rs. 100 today, on March 21. The 22 carat gold rates are quoted at Rs. 47,400/10 grams, while the 24 carat gold rates are quoted at Rs. 51,700/10 grams in the domestic markets.

Gold is a hedge against inflation, with rising inflation gold rates hike in the global markets. In addition to the 40 years of high inflationary pressures in the USA, the Russia-Ukraine geopolitical uncertainties are roiling the commodity markets, like crude oil and gold. Global growth expectations are falling, and commodity markets are gaining eventually. After reaching $2072/oz level, gold prices in the Comex are a bit moderate now, at around $1930/oz.

Recently, to control the high inflationary pressure, the US Federal Reserve has hiked the interest rate by 25 bps. But, this is having a little impact on the gold rates. Generally, with an interest rate hike, gold rates fall. But the global geopolitical crisis is driving the gold markets to gain.
On the other hand, US President Joe Biden has warned China of 'consequences' if China aids Russia on the war ground. Biden is against the side of Russian President Vladimir Putin, and if Chinese President Xi Jinping supports Russia financially, it can affect US-China trade relations further. However, Beijing will also think about maintaining good terms with Moscow financially, as already the US-China trade relation is not running quite smooth. So, it has created a dilemma in the global political and economic picture. These uncertainties are leading the gold markets to stay bullish.

Earlier, International Monetary Fund (IMF) commented, "The war may fundamentally alter the global economic and geopolitical order should energy trade shift, supply chains reconfigure, payment networks fragment, and countries rethink reserve currency holdings. Increased geopolitical tension further raises risks of economic fragmentation, especially for trade and technology."

In January and February, gold rates were falling marginally. So, the present bullish market is good for traders, who obtained gold at a lower price during that time.

Today, the Comex gold futures have fallen marginally by 0.03% and were quoted at $1927.70/oz, till last traded. The spot gold prices are quoted at $1924.40/oz, gaining by 0.08%, till last traded. On the other hand, the US dollar index in the spot market stood at 98.35, gaining marginally by 0.04%. In India, the MCX gold in April future quoted at Rs. 51,421 grams, falling by 0.05%, till last traded.