Indian Gold Rates Can Rise In October Even As USA Inflation Rises To 30 Years High

October gold prices started to gain since Thursday this week, after a 3 months low range and it was expected that the first week of October might be following this trend. But the USA's Core Personal Consumption Expenditure (PCE) reports, August came out on Friday showing a sharp rise in inflation at 4.3%. It is their highest inflation figure in the last 30 years, since 1991. So, the international gold rates are going to impact intensely as this inflation hike can force US policymakers to maintain the status quo in their monetary policy. This can help the gold prices to gain further.

The Core PCE is preferred by the US Federal Reserve, as they think it is a more accurate measure of inflation than the CPI. PCE tacks "a broader range of goods and gives more weight to substitution - when consumers buy a cheaper product to substitute for a more expensive one". The US Fed Chair Jerome Powell's earlier dovish sentiment can be in-depth again. USA's target to keep the inflation rate around 2% failed in August, and this data will restrict them from increasing the interest rates soon or halt them from taper the liquidity infusion on large scale. So, the gold prices can rise again to the $1780 level, approximately. Investors will be again taking shelter under gold. The precious metal is a hedging tool for investors against inflation. Gold rates are likely to gain with higher inflation, beating equities or bonds. Hence the gold traders can think of it as a silver lining now, although common buyers are going to lose.

Last traded prices

Today, on Saturday, the spot market and futures markets are closed. Till Yesterday, on October 1, gold prices in the Comex December futures stayed around $1760/oz and spot gold prices reached even $1765/oz at some point. MCX October gold future also rose to Rs. 46,500 yesterday, till last traded. If this bullish sentiment works again on Monday, the market might get to cross this range and be at $1800/oz. According to experts, "The $1,750 level is now a support, and $1,800 is resistance." In India, 22 carat gold was quoted at Rs. 45,470/10 grams and 24 carat gold was quoted at Rs. 46,470/10 grams, till yesterday.

Market volatility

However, the Indian gold market is going to stay quite volatile this month. Although the prices are rising now, any time the situation can flip. Because apart from the US PCE data, traders are concerned about November Fed meet. Traders, in the last week of October, will be busy anticipating the US tapering timeline. Tapering can drag down the gold rates.

India imports gold from foreign markets, so Indian gold rates depend on International prices. If the gold prices rise in the international markets this month, the domestic gold markets will walk on the same path. So, it will be a good time for Indian gold jewellers ahead of the festive season. The India Bullion and Jewellers Association (IBJA) was trying to keep the gold prices strong now, as the gold purchase increases considerably during the festive seasons. People buy gold substantially for marriage or other auspicious occasions, and poor gold rates could have doomed their business. However, the common buyers will have an added pressure on the prices.