Gold prices come under pressure on higher US inflation

Mumbai: Gold prices fell by Rs 804 per 10 grams in the spot market to Rs 61,590 as the US inflation rate remained higher than expected and this in turn might delay the much-expected US Fed interest cut programme this year.

The market expected the first US Fed rate reduction to come by May before the country goes for election in November.

The yellow metal for April delivery on MCX was down by Rs 149 per 10 grams at Rs 61,355 while the June contract fell by Rs 140 to Rs 61,717.

Suvankar Sen, Managing Director, Senco Gold & Diamonds, said the higher inflation rate in the US will not only delay the decision on interest rate reduction but also lower the number of cuts expected in this year. Both gold prices and stock markets have gone down across the globe following the yields in the stock market firming up, he said.

However, he said the geopolitical risks still remain with the wars in West Asia and Ukraine besides other uncertainties over recessionary in major economies will lead to renewed buying of the gold.

Jateen Trivedi, VP Research Analyst, LKP Securities said the US Consumer Price Index data in the US came in at 3.1 per cent surpassing the market’s expectations of 2.9 per cent. Consequently, there was a surge in the dollar index from $103.85 to approximately $104.80, exerting significant downward pressure on gold prices, he added.

Image courtesy of Business Today

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