Gold futures sink ahead of Fed policy outcome

Gold futures sink ahead of Fed policy outcome
Gold futures slumped in the domestic market on Wednesday, sinking to the lowest level in nearly six weeks in the overseas market as investors bet that the US Federal Reserve may scale back its USD 85 billion monthly bond buying program today, dimming the appeal of the precious metal, which is a hedge against the inflationary risk of monetary stimulus.

Analysts are expecting a USD 5 billion reduction in treasury purchases by the Fed when it announces its monetary statement.

Fears of deflation also hit the precious metal, which is a traditional hedge against inflation. Consumer prices in the US rose at the weakest pace in three months, up 0.1 per cent in August 2013 from the previous month, following a 0.2 per cent gain in July.

Gold futures for October 2013 contract, at MCX, were trading at Rs. 29,382 per 10 grams, down by 1.15 per cent after opening at Rs. 29,441 against the previous closing price of Rs 29,723. It touched an intra-day low of Rs 29,336. (At 10:36 AM).

Dion Global Solutions Ltd.

Story first published: Wednesday, September 18, 2013, 12:20 [IST]
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