Gold prices fell in India on Thursday, according to data compiled by FXStreet.
Gold price was at INR 6,219.88 per gram, down from INR 6,244.83 on Wednesday.
Gold prices fell to INR 72,544.30 per tola from INR 72,838.46 per tola the previous day.
| Unit of measurement | Gold Price (Indian Rupee) |
|---|---|
| 1 gram | 6,219.88 |
| 10 grams | 62,196.09 |
| Torah | 72,544.30 |
| Troy ounce | 193,457.40 |
FXStreet calculates gold prices in India by adapting the international price (USD/INR) to the local currency and unit of measurement. Prices are updated daily based on market rates at the time of publication. Prices are indicative only and local rates may vary slightly.
Global market trends: US dollar rises as Fed rate cut expectations weaken, COMEX gold prices fall
- The initial market reaction to a softening U.S. consumer price index on Wednesday quickly faded after the Federal Reserve said it expected only one interest rate cut this year, likely dragging down the price of low-yielding gold.
- The U.S. Bureau of Labor Statistics (BLS) reported that inflation, as measured by the change in the Consumer Price Index (CPI), was flat in May for the first time since June of last year, with the annual rate declining slightly to 3.3% from 3.4%.
- Annual core CPI, which excludes volatile food and energy prices, rose 0.2% during the reporting month and rose 3.4% year-on-year, compared with April’s 3.6% increase and the consensus forecast of a 3.5% increase.
- The Fed left interest rates unchanged at the end of its two-day policy meeting and now expects rates to fall to 5.1% this year, suggesting just one rate cut in 2024, down from three it forecast at its March meeting.
- Additionally, the Fed raised its neutral rate forecast to 2.8% from 2.6% previously, helping to boost the US dollar slightly and encouraging outflows from US dollar-denominated instruments.
- French President Emmanuel Macron’s decision to call early general elections later this month has increased political uncertainty in the euro zone’s second-largest economy, which could support safe-haven precious metals.
- US macro data on Thursday could create some short-term trading opportunities in the early North American hours ahead of the Bank of Japan (BoJ) policy decision on Friday, bringing volatility to the markets.
Gold FAQ
Gold has played a vital role throughout human history, as it has been widely used as a store of value and a medium of exchange. Today, apart from its luster and use in jewellery, the precious metal is widely recognised as a safe haven asset and considered a good investment during volatile times. Gold is also widely seen as a hedge against inflation and currency depreciation, as it is not dependent on any particular issuer or government.
Central banks are the largest holders of gold. To support their currencies in times of uncertainty, central banks tend to buy gold to diversify their reserves and to impress upon them the strength of their economies and currencies. Large gold reserves can be a source of confidence in a country’s solvency. According to data from the World Gold Council, central banks added 1,136 tonnes of gold worth about $70 billion to their reserves in 2022, the highest annual purchase since records began. Central banks in emerging countries such as China, India and Turkey are rapidly increasing their gold reserves.
Gold is inversely correlated with the US Dollar and US Treasury Bonds, the primary reserve and safe haven assets. When the US Dollar falls, gold tends to rise, allowing investors and central banks to diversify their assets during volatile times. Gold is also inversely correlated with risk assets. Rising stock markets tend to drive gold prices down, while sell-offs in risky markets tend to favor the precious metal.
Gold prices fluctuate due to a variety of factors. Geopolitical instability or fears of a deep recession can send gold prices soaring due to gold’s status as a safe haven. As a non-yielding asset, gold tends to rise in value the lower interest rates are, but rising cost of funds typically weighs on gold. Still, since the asset is priced in dollars (XAU/USD), most of the movement is determined by the movement of the US Dollar (USD). A strong dollar tends to keep gold prices in check, while a weak dollar can boost gold prices.
(An automated tool was used to create this post.)
