Gold futures tad lower on Fed stimulus caution

Posted By: Religare
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Gold futures tad lower on Fed stimulus caution
Gold futures fell marginally in the domestic market on Wednesday tracking a weak trend in overseas market as most investors stayed cautious ahead of the outcome of the FOMC meet today. Investors fear that the Fed may signal a reduction in its USD 85 billion monthly bond buying program over the coming months as US economic recovery picks up pace, dimming the appeal of the precious metal, which is a hedge against the inflationary risk of monetary stimulus.

At the same time, easing concerns over inflationary pressures in the US also weighed on the bullion, a hedge against rising consumer prices. Inflation in the US remained muted last month as the consumer price index rose 0.1 per cent in May 2013 from the previous month.

Further, physical demand for gold from India and China, the two biggest bullion consuming nations, has slowed from the peak demand levels in April and May, taking a further toll on the precious metal.

At the MCX, Gold futures, for the August 2013 contract, are trading at Rs 27,940 per 10 gram, down by 0.10 per cent, after opening at Rs 27,914, against a previous close of Rs 27,967. It touched an intra-day low of Rs 27,891 (At 10:22 AM).

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