NEW DELHI: International gold prices are now trading at around USD 1,700-1,760 per ounce and are expected to remain stable over the next few weeks.
Prices somewhat increased as a result of the speculation that the US Fed's rate increases might eventually level out. "The movement of the US Dollar has always been correlated with the movement of gold prices. The Fed's rate increases and the increase in market yields set the stage for the decline in gold prices.
Gold prices decreased as a natural result of the US Dollar index's rise and increased interest rates "Emkay Wealth Management, a financial advising firm, said in a note. Even the ongoing inflation was unable to support a rise in gold prices. It shows that gold prices are becoming less correlated with the rate of inflation, a feature for which gold was once known as a defence against inflation. "The current softening of the US Dollar is the cause of a slight increase in gold prices. The chairman of the US Federal Reserve said that data would determine future rate decisions and added that there was no imminent risk of a US recession. The announcement has raised hopes that the Fed may scale back its rate increases following its meeting in September "The advisory firm's letter stated. For the past few months, the price of gold on the Multi Commodity Exchange of India (MCX) has fluctuated between Rs 50,258 and Rs 52,122 per 10 grams. It may continue to trade in these large ranges, but at this point, the movement of the Indian rupee will be important, it said.
Notably, the increase in import taxes imposed by the Indian government at the beginning of July might have kept gold prices mostly stable on domestic markets. The import tax on gold had been increased by the central government from 10.75 to 15.0 percent. India is the second-largest consumer of gold, and imports account for a sizable amount of its needs. India is a net gold importer.
The country's trade deficit, or the difference between net imports and exports, has been growing, and the increase in import duties was considered as a strategy to discourage imports.
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