Gold futures fell in the domestic market on Wednesday, dropping to the lowest level in three weeks in the overseas market as investors and speculators exited positions in the precious metal amid fears that the US Federal Reserve may start tapering QE from September, dimming the outlook for the bullion, which is a hedge against the inflationary risk of monetary stimulus. A top Fed official acknowledged the good progress in the labour market while signaling that a tapering of QE could be on the cards in September.
Holdings in the SPDR Gold Trust, the biggest bullion backed exchange-traded product, fell to the lowest since February 2009 to 915.04 metric tons on Tuesday.
Gold futures for October 2013 contract, at MCX, were trading at Rs. 27,478 per 10 grams, down by 0.49 per cent after opening at Rs. 27,619 against the previous closing price of Rs. 27,614. It touched an intra-day low of Rs 27,462. (At 11:10 AM).