Fed stimulus hopes lift Gold futures

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Fed stimulus hopes lift Gold futures
Gold futures surged in the domestic market on Thursday as investors and speculators created fresh positions in the precious metal tracking gains in overseas markets as disappointing US economic data fueled speculation that the US Fed may maintain the current pace of its monthly bond buying plan, bolstering the appeal of the bullion, which is a hedge against the inflationary risk of monetary stimulus.

US Q1 GDP growth lagged estimates, jobless claims rose while pending home sales grew at a slower pace last month, underscoring economic weakness. A weaker dollar also boosted the demand for the precious metal as an alternative asset.

A weaker greenback makes the bullion less expensive for those holding other currencies, thus bolstering demand. Robust physical demand in the domestic spot market also supported the yellow metal.

At the MCX, Gold futures, for the June 2013 contract, closed at Rs 27,158 per 10 gram, up by 1.98 per cent, after opening at Rs 26,636, against a previous close of Rs 26,630. It touched an intra-day high of Rs 27,198.

Read more about: gold
Story first published: Friday, May 31, 2013, 13:30 [IST]
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