The yellow metal sizzled on Thursday, advancing nearly 2.5 per cent as Gold regained its safe haven appeal amid a flight from risky assets as investors fret over the health of the global economy with China mired in a steep slowdown while emerging market currencies nosedive.
Stocks from Asia to Europe and the US nosedived on Thursday as deepening concerns over slowing global growth unnerved traders, souring sentiment in equities and risky emerging market assets, boosting the safe haven demand for the precious metal. Citigroup cut its global economic growth forecast for 2015 for a third time to 3.1 per cent from 3.3 per cent amid currency weakness and China slowdown woes.
A weaker dollar also boosted the demand for Gold as an alternative asset. Weaker greenback makes the bullion cheaper for those holding other currencies, thus bolstering demand.
Dovish FOMC minutes suggested the case for a slight pushback in the policy tightening timetable in the US amidst weakness in inflation, bolstering the lure for the Bullion as a store of value.
While the Fed stressed that conditions which warrant rate tightening are approaching, policymakers are seeking more evidence of a pickup in economic growth and labour markets and need more confidence that inflation is moving towards the required goal, before deciding a lift-off in interest rates for the first time since 2006.
Gold may extend a rally today as a worsening China manufacturing slump and a steep slide in Asian stocks which hit a 17-month low spur safe haven demand.
At the MCX, Gold futures for October 2015 contract closed at Rs 26,849 per 10 gram, up by 2.49 per cent after opening at Rs 26,200, against the previous closing price of Rs 26,196. It touched the intra-day high of Rs 26,874.