Gold declines after touching a record high

Business

oi-Monika Nihalani

By Monika Nihalani

Published: Wednesday, September 7, 2011, 12:10 [IST]

Gold futures on Wednesday fell for a second day after a record rally as the market continued to digest the surprise move by Swiss National Bank to peg its national currency.

The Swiss central bank said on Tuesday it would set a minimum exchange rate target of 1.20 francs to the euro as the current value of the franc was a threat to their economy.

Switzerland is not a member of the European Union, but its economy is heavily dependent on eurozone exports, and the rise of the franc was hitting industry and tourism hard.

The bank also said that it would buy foreign currency in unlimited quantities which prompted investors to seek refuge from markets who are under the fears over the fragility of the European and US economy.

Over in US, Obama plans to propose boosting job growth by injecting more than $300 billion into the economy next year through tax cuts and infrastructure spending.

All these news encouraged bullion traders to go for profit-booking, which led to fall in gold prices after it hit record highs on Tuesday.

At the Multi Commodity Exchange, gold for delivery in October opened at Rs 27,888 per 10 grams and touched an intraday low of Rs 27,326 per 10 grams and was trading the range of Rs 27,422 – Rs 27,424 per 10 grams around 11:53 am IST.

Similarly, the metal for April contract delivery opened at Rs 28,331 per 10 grams and was trading in the range of Rs 28,280 – Rs 28,330 per 10 grams.

Markets will be keeping a close eye on a global economic recovery.

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