After more than a week, gold rates fell in the Indian markets, mirroring the declining trend in the global markets.
Today, Aug 19 the price of 22 carat gold was quoted at Rs. 4613 per gram in India and the rate yesterday was Rs. 4650, dropping Rs. 37 per 1 gram gold. 100 grams 22 carat gold rate today was priced at Rs. 4,61,300. For 24 carat gold, the rate was Rs. 4713 per gram on Aug 19.
On MCX, gold FUTCOM, gold fell to 0.29% with an absolute change of Rs. 139. It is a significant change in more than a week on MCX - an Indian exchange that trades commodities. The last traded price of gold FUTCOM was Rs. 47141 per 10 grams till 18th August, 23.29 pm.
Prices of gold jewellery, are likely to ease today due to subdued rates. Generally, jewellery is curved out from 22 carat gold and a price fall in the same, will make it a good for buyers. Also, gold ETF like SBI gold ETF fell 0.13% and SBI Mutual Fund - Gold Exchange Traded Scheme dropped by 0.29% today.
Why did the prices drop?
The Indian Bullion Jewellers Association (IBJA) is an association that plays a key role to determine daily gold rates in India. IBJA members consist biggest gold dealers in India and collectively fix the rates. They derive gold prices from the international market. According to a KITCO report, in the FX markets, the dollar index moved higher overnight by 0.31%. This might have influenced the gold rates negatively today.
Although the US Fed did not give any indication of tapering or interest rate hikes, the prices are down today. Tapering in the economy means slowing of asset purchases or reducing the size of its bond-buying programme by a central bank. The bond-buying programme is known as quantitative easing (QE) that is indicated for economic stimulus at some required point of time. Tapering is a process that essentially comes after the QE activities.