Gold Rates Are Down Sharply In The Global Markets, As Powell Remains As Fed Chair

Gold rates are sharply down in the international markets since November 22, Monday. From the first week of the current month, gold rates went significantly as the USA's CPI inflation rate went to 6.2%, the highest in more than the last 30 years. But from the third week of the month, gold rates internationally did not perform quite well.

Jerome Powell as Fed Chair

Now, after US President Joe Biden has finally announced that Jerome Powell will remain as the US Federal Reserve Chairman in the next term, for the upcoming 4 years, gold rates went down sharply in the gold futures markets, and the spot market. On the other hand, US Dollar gained a 15-month high and US Treasury yields also increased, after the announcement. Earlier, it was anticipated that Biden might pick Lael Brainard as the Fed chair, who is more dovish than Powell, but the final decision has dropped that speculation.

Gold rates

Along with gold, silver prices are also down, while gold is being quoted at a two-week low rate. Comex December Gold Futures stood at $1808/oz till November 22, while in the spot market gold stood at $1808.6/oz till last traded in the morning, on November 23. Gold rates range at around $1805/oz is concerning for gold traders, but it will be profitable for investors and common buyers all over the world.

Inflation

Analysts were eyeing for a $1900/oz and above for gold as the inflation is not expected to fall significantly very soon, and the US Fed is not ready to hike the interest rate this year. But this significant drop can keep the gold rates subdued globally for the time being. However, if inflation continues to surge, gold rates will hike again in the international markets.

As Powell is going to hold the Chair of US Fed, analysts are anticipating that Powell will retain the same monetary policy. Hence, without any more speculation about dovish policy, gold rates are dropping globally. Additionally, oil prices also stood at a six-week low overnight, after Biden announced Powell's name as Fed Chair.

Expert's opinion

Analyst Jim Wyckoff told Kitco News, "It can be argued that the Powell news was just an excuse for the shorter-term gold and silver futures traders to ring the cash register and take profits after recent good price gains. Reason: The marketplace generally expected Powell to be reappointed and gold should not have reacted the way it did. Nothing has changed for the metals markets, fundamentally, from last Friday's closes. No significant chart damage was inflicted in gold or silver today and their near-term price up-trends remain in place. The metals markets are likely to continue to be supported by the inflation trade-meaning the metals will continue to be sought out as a hedge against rising and even problematic price inflation."

Indian gold rates

In India, gold rates are also on the verge of falling. On November 23, 22 carat gold rates, quoted at Rs. 48,200, and 24 carat gold rates Rs. 49,200. Since November 18, Indian gold rates started to fall significantly, and that trend is expected to continue now. This will certainly improve gold demand in India and will be profitable for common buyers. After the festive season of Diwali, Indians are having the wedding season now. So, a fall in gold rates will be bankable for them.

(Also read: Gold Rates Traded Slightly Down In 3rd Week Of November: What Is The Trend?)