Sharp Drop In Gold Rates Before Akshaya Tritiya: Buy Now?

A sharp drop in the Indian gold rates is expected to enhance the retail gold demands before Akshaya Tritiya (May, 3) which is a very auspicious day for Indians. On this day, Indian prefer to buy gold and other auspicious metals expecting it will bring prosperity to their families. If today's trend continues till tomorrow, sales of god jewelleries will rally even more. Significantly, the US Dollar index which is one of the biggest drivers of gold rates is rising now, keeping the gold rates under pressure.

Gold rates have fallen significantly by Rs. 1190/10 grams in the domestic markets today. The 22 carat gold rate quoted at Rs. 47,200 and 24 carat gold rate quoted at Rs. 51,510/ 10 grams today.

IBJA fixes the gold rates in the Indian markets, depending on the international markets. Today, in the global markets gold has seen a sharp fall which has been reflected in India. Investors are now expecting the US Fed can raise the interest rate by 50 bps in the US. This will drag down the gold rates while helping the US bond yield to gain more. Anticipating this trend, global investors are now showing less interest in gold. So, gold rates are falling now.

However, giving another perspective, Ivo Pezzuto, Professor of Global Economics, Competitiveness, and Digital Transformation at the International School of Management in Paris recently told Kitco News, "We can see a recession and stagflation from the war possibly this year or next year. If the central bank raises interest rates or unwinds the balance sheet too far and too quickly to avoid destroying purchasing power, a recession is possible. There could be stagflation, and not just in the US." This mounting inflation rate will remain a concern for the gold markets, globally.

Comex gold futures were quoted at $1880.80/oz, falling by 1.61%, till last traded. Yesterday it was last quoted at $1911.70/oz. The spot gold prices are quoted at $1880.80/oz, falling by 0.89%, till last traded. On the other hand, the US dollar index in the spot market stood at 103.37, gaining by 0.08%. In India, the MCX gold in June future was quoted at Rs. 51,027 grams, falling by 1.40%, till last traded.