Gold falls on concerns over scope of stimulus and strong dollar

Gold falls on concerns over scope of stimulus, strong dollar
Gold prices reversed its previous day's gains, falling by 0.76 per cent on Thursday at the domestic markets after the Federal Reserve linked its monetary policy to unemployment in turn raising concerns that future economic stimulus could be restricted.

The Fed set unemployment and inflation thresholds for exit strategy.

Gold futures for February 2013 contract, at MCX, were trading at Rs. 31,193 per 10 grams, down by 0.65 per cent after opening at Rs. 31,380 against the previous closing price of Rs. 31,397. 

Sentiment weakened further as the "fiscal cliff" talks could drag on post Christmas due to the major differences between congressional Republicans and the White House on how to avoid steep tax hikes and budget cuts

Moreover, a stronger dollar makes gold expensive for those holding other currencies, thus reducing demand. The U.S. dollar index, a measure of the value of the United States dollar relative to a basket of foreign currencies, was trading 0.08 per cent higher at 79.882 on the Inter-Continental Exchange (ICE) at 11.33 AM IST.

Read more about: gold, dollar, fiscal cliff
Story first published: Thursday, December 13, 2012, 13:30 [IST]
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