Gold futures slip as upbeat US data bolsters case for QE taper

Gold futures fell in the domestic market on Friday as investors and speculators exited positions in the precious metal after robust US data signaled a pickup in the world's biggest economy, bolstering the case for the US Federal Reserve to start reducing its monthly USD 85 billion bond buying program by the end of the year, dimming the appeal of the precious metal, a hedge against the inflationary risk of monetary stimulus.

Manufacturing activity in the US expanded at the sharpest rate in over two years last month while jobless claims fell to the lowest level in more than five years.

A stronger dollar also dimmed the demand for the precious metal as an alternative asset. Stronger greenback makes gold more expensive for those holding other currencies, thus dimming demand.

Gold futures for August 2013 contract, at MCX, were trading at Rs. 27,947 per 10 grams, down by 0.97 per cent after opening at Rs. 28,130 against the previous closing price of Rs. 28,220. It touched an intra-day low of Rs 27,855. (At 11:25 AM).

Read more about: gold, gold futures
Story first published: Friday, August 2, 2013, 12:51 [IST]
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