Gold extends gains; rises on central banks stimulus measures, weak dollar

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Gold prices extended gains, rising by 0.53 per cent on Friday at the domestic markets as aggressive policy easing from global central banks boosted the appeal of the bullion, which is a hedge against the inflationary risk of monetary stimulus. The ECB cut rates to a record low and said that monetary policy will remain accommodative for as long as needed. Gold futures for June 2013 contract, at MCX, were trading at Rs. 27,056 per 10 grams, up by 0.53 per cent after opening at Rs. 27,020 against the previous closing price of Rs. 26,914. It touched the intra-day high of Rs. 27,127 till the trading. (At 11.32 AM today).

Sentiment improved further as the US Federal Reserve stuck to its USD 85 billion bond buying program to boost US economic growth. The US Federal Reserve in its May policy decision stuck to its ultra- accommodative monetary policy stance, maintaining its USD 85 billion asset purchases program to support the still sluggish US economy.

Moreover, weaker greenback makes gold cheaper for those holding other currencies, thus increasing 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 0.03 per cent lower at 82.199 on the Inter-Continental Exchange (ICE) at 11.25 am IST.

At the Commodity Exchange (COMEX), gold future for June 2013 delivery traded at US$1,473.8 per ounce, up by 0.42 per cent. It opened at US$1,466.2 against the previous closing price of US$1,467.6. It touched the intra-day high of US$1,476.4. (At 11.33 am IST).

Read more about: gold
Story first published: Friday, May 3, 2013, 13:30 [IST]
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