Will Gold Rates Rise Again?: Equities Falling, Sturdy Inflationary Concerns

Will gold rates rise again? It is one of the major concerns among the investors currently. Since the first week of May, gold rates in the international markets started to fall, and in the last two weeks, the yellow metal stayed mostly bearish. However, in the past three trading days, global stock markets have started to fall sharply. Nifty dropped by 2.65%, Nasdaq dropped by 4.73%, Dow Jones dropped by 3.75%, and FTSE 100 Index dropped by 2.47%, till last traded on May 19. Rising inflationary concerns and interest rate hikes have triggered the markets to stay bearish. In this situation, gold rates have gained marginally today in the spot market and futures markets.

High inflation has impacted the retail demands largely which has been reflected in the latest retail sales data for April in the USA. Additionally, corporates have indicated a downfall in their profitability in the upcoming days. The recent interest rate hikes and expectation of the same monetary policy to be adopted in the next month have helped the government bonds to rise, pulling the stock market indexes down. The higher interest rates will affect the companies and corporates that have debts. Also, higher interest rates are initiated to squeeze liquidity in the economy and control inflation. This can again affect the retail demands. So, the downfall in the corporate earnings and equities was expected. Additionally, the US dollar index, which was reaching fresh highs in the past week has also fallen. Gold and the US dollar index are adversely related. So, gold has corrected sharply today.

Considering these factors, investors and traders again can try to take shelter under commodities. Crude oil and gold have always been investors' favourites. Gold is also known as the hedge against inflation. So, if the equities keep falling and the inflation rate surges further, gold will show its potential to rise again. So, investors can think about buying gold at a time, when gold rates are still moderate.

Today, the gold rates in the international markets have corrected by around 1.30%, reflecting the trend. The Comex gold futures were quoted at $1839.30/oz, gaining by 1.28%, from the last trading day. Yesterday it was last quoted at $1815.90/oz. Similarly, the spot gold prices were last quoted at $1841.80/oz, gaining by 1.31%, from the last trading day. The US dollar index in the spot market stood at 102.69, falling by 1.07%. In India, the MCX gold in June future was quoted at Rs. 50,551/10 grams, gaining by 0.66%, from the last trading day. Indian gold rates depend on international prices, so, rates in the domestic markets have also started to rise after a mostly bearish week. In India, the 22 carat gold rates gained by Rs. 200/10 grams, and 24 carat gold rates gained by Rs. 220/10 grams, on May 19. The 22 carat gold rates are quoted at Rs. 46,300/10 grams, and the 24 carat gold Rs. 50,510/10 grams.

Amit Khare, AVP- Research Commodities, Ganganagar Commodity Limited has shared his estimated support and resistance price for the yellow metal. Khare has mentioned, "June Gold closing price at Rs. 50173, Support 1 at Rs. 49900, Support 2 at Rs. 49700, Resistance 1 at Rs. 50300, and Resistance 2 at Rs. 50500."