Gold futures fall as Fed tapers stimulus

Posted By: Religare
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Gold futures fall as Fed tapers stimulus
Gold futures fell in the domestic market on Thursday as investors and speculators exited positions in the precious metal after the US Federal Reserve cut its monthly bond buying program by USD 10 billion to USD 75 billion from USD 85 billion citing the recent progress in the US labour market, dimming the appeal of the bullion, which is a hedge against the inflationary risk of monetary stimulus.

The decision to taper was coupled with a stronger commitment to maintain interest rates at very low levels even after the targeted unemployment rate is reached, to push the economy forward. A stronger dollar also dimmed the appeal of the precious metal as an alternative asset.

Gold futures for February 2014 contract, at MCX, were trading at Rs. 28,720 per 10 grams, down by 0.51 per cent after opening at Rs. 28,767, against the previous closing price of Rs 28,868. It touched an intra-day low of Rs 28,687. (At 11:16 AM).

Dion Global Solutions Ltd.

Read more about: gold, gold futures, qe3, federal reserve, hedge
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