Gold futures tumbled in the domestic market on Thursday, slumping to the lowest level in 34 months in the overseas market amid rising speculation that the US Federal Reserve may start tapering QE in the near-term as the economy improves, dimming the appeal of the precious metal, which is a hedge against the inflationary risk of monetary stimulus.
A fall in jobless claims last week, a rebound in consumer spending last month and a bigger than expected rise in pending home sales in May signaled an acceleration in the US economy.
Federal Reserve Governor Jerome Powell said that the Fed may scale back stimulus later this year if economic growth is sustained. Powell added that the central bank may slow large-scale asset purchases more quickly if the economy accelerates at a faster than expected pace.
At the MCX, Gold futures, for the August 2013 contract, closed at Rs 25,375 per 10 gram, down by 2.91 per cent, after opening at Rs 26,151, against a previous close of Rs 26,136. It touched an intra-day low of Rs 25,265.