Will Gold Rates Keep Falling? Dropped Rs. 1000 In 2 Days: Good For Indian Investors?

Gold rates in the international markets have fallen to US$ 1,802.50/oz on June 30. This is having a direct impact on the Indian gold market. Indian gold rates have fallen sharply reflecting the trend, on the last trading day of the month. The 22-carat gold rate is quoted at around Rs. 46,650/10 grams, and 24-carat gold rate is quoted at around Rs. 50,890/10 grams, falling by Rs. 100 and Rs. 110 respectively. In the past 2 days, gold rates have dropped by around Rs. 1000. In June, the highest rate for the yellow metal has been quoted at Rs. 48,360/10 grams, on June 13, and the lowest rate has been quoted at Rs. 46,650/10 grams today. So, in the last 2 weeks, gold rates have fallen by around Rs. 1710, with a sharp drop by 3.6%. So, how is it good for the Indian investors?

Indians consider gold as a very auspicious asset and invest mostly during the festive seasons or wedding seasons. Buy, in June-July Indians do not observe any wedding season, so the retail sales of gold generally fall marginally. However, the current fall in the gold rates can influence common citizens to buy gold for the future. So, this can increase retail sales. Buying gold at lower prices can augment profitability in the long term, which can beat the high inflation rate in the country.

Even in the US, the high inflation rate is the most important concern now, many analysts are also expecting a recession, however, the US Fed is trying to 'avoid' it. The May CPE price index was up by 6.3% YoY, with the core rate was up by 4.7% in the same period. In April, the PCE price index was also up by 6.3% YoY. Consumer confidence is drowning due to high inflation. On the other hand, US Dollar is reaching all-time high level, against other currencies, including the Indian Rupee. So, at that time, gold or silver can again emerge as a safe haven.

On Thursday, the US Labor Department reported that the weekly jobless claims have dropped by 2,000 to 231,000, which went down from the last week's revised estimate of 233,000 claims. So, a strong employment situation in the US is expected to strengthen the US Dollar further, which will be a key factor to pull the gold rates down globally, impacting similarly the Indian gold markets.

Additionally, in a recent report, Kitco News mentioned, "The U.S. data point of the day was the personal income and outlays report for May, including the personal consumption expenditures price index component of the report that is said to be the Federal Reserve's favorite inflation gauge. Metals market bulls were briefly assuaged by the stable readings in the report, as many reckoned the numbers could have been worse, possibly prompting the Federal Reserve to be even more aggressive in its monetary policy tightening. Raw commodity traders, including metals traders, have taken a tack recently of being more worried about less consumer and commercial demand for commodities amid an economic recession-as opposed to the notions of higher inflation being supportive for raw commodity prices."

Today, the Comex gold futures were quoted at $1,806.80/oz, falling by 0.58%, from the last trading day. Yesterday it was last quoted at $1,817.50/oz. The spot gold prices were last quoted at $1809.40/oz, falling by 0.52%, from the last trading day. However, the US dollar index in the spot market stood at 104.74, falling by 0.30%. In India, the Mumbai Commodity Exchange (MCX) gold in August future was quoted at Rs. 50,569/10 grams, falling by 0.32%, from the last trading day.