Gold extends losses, falls by 0.21% after US data, strong dollar

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Gold extends losses, falls by 0.21%
Gold prices extended losses, falling for the second day on Friday at the domestic markets after US reported a better-than-expected economic data, bolstering optimism in the economy which in turn reduced the chances of further monetary stimulus measures from the Federal Reserve.

The US Commerce Department showed in a report yesterday that US housing starts increased 12.1 per cent to an annual pace of 954,000 in December 2012 from a revised 851,000 annual pace in November 2012. Apart from this, the US Labor Department stated on Thursday that the number of filing new claims for unemployment benefits declined by 37,000 to 335,000, the lowest level since January 2008.

Gold futures for February 2013 contract, at MCX, were trading at Rs. 30,648 per 10 grams, down by 0.36 per cent after opening at Rs. 30,670 against the previous closing price of Rs. 30,758 at 2.30 pm IST.

Sentiment weakened further as 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 0.07 per cent higher at 79.703 on the Inter-Continental Exchange (ICE) at 11.26 IST.

Prices also fell on reports that India's gold imports could drop by up to a quarter this year if, as the government again raises the duty on the precious metal indicating weak demand for the commodity.

At the Commodity Exchange (COMEX), gold future for February 2013 delivery traded at US$1,688.6 per ounce, down by 0.13 per cent. It opened at US$1,687.4 against the previous closing price of US$1,690.8. It touched the intra-day low of US$1,684.9. (At 11.27 am IST).

Read more about: gold, mcx
Story first published: Friday, January 18, 2013, 13:30 [IST]
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