COMEX Gold edged up from lows near $ 1295 per ounce after the US Fed hiked interest rates yesterday. In a key decision, the Federal Reserve on Wednesday raised its key interest rate by a quarter points to 2%, as expected. In a surprise move, the central bank now projects four interest rate hikes in 2018, rather than three. They continue to see three rate hikes in 2019. This triggered good buying in Gold and prices gained back above $ 1300 per ounce levels. The commodity currently trades at $ 1302 per ounce – up 0.10% on the day-. MCX Gold futures closed at Rs 31130 per 10 grams- almost unchanged on the day and should see good momentum today.
US inflation readings are staying elevated. The US Labor Department said its consumer price index rose by 0.2% in May, matching the increase seen in April. Energy prices climbed by 0.9% in May after jumping by 1.4% in April, with a 1.7% spike in gasoline prices offsetting decreases by some of the other energy component indexes. Excluding food and energy prices, core consumer prices still increased by 0.2% in May after inching up by 0.1% in April. The annual rate of consumer price growth accelerated to 2.8% in May from 2.5% in April, reaching its highest level since February of 2012.
Global commodity prices are also picking up. Global agricultural food commodity prices edged up in May, with dairy prices recording a significant jump. The FAO Food Price Index averaged 176.2 points during the month, up 1.2% from April. The FAO Food Price Index is a measure of the monthly change in international prices of a basket of food commodities.