Gold futures rose sharply in the domestic market on Thursday as investors and speculators created fresh positions in the precious metal tracking a rally in the overseas markets as a slump in Chinese manufacturing this month raised concerns over the global economic recovery, dimming the appeal of risky assets including equities, bolstering the demand for the precious metal as a safe haven asset.
Gold futures also rose in the overseas market as a weaker dollar boosted the demand for the yellow metal as an alternative asset. A weaker greenback makes gold less expensive for those holding other currencies, thus bolstering demand.
The Federal Reserve Bank of St. Louis President James Bullard said that the Fed should continue with its existing pace of asset purchases, bolstering the appeal of the bullion, which is a hedge against the inflationary risk of monetary stimulus.
At the MCX, Gold futures, for the June 2013 contract, closed at Rs 26,440 per 10 gram, up by 1.84 per cent, after opening at Rs 26,020, against a previous close of Rs 25, 963. It touched an intra-day high of Rs 26,480.