The yellow metal paused a rally as the dollar rebounded, curbing the appeal for Gold as an alternative asset. Stronger greenback makes Gold more expensive for those holding other currencies, thus dimming demand.
Notwithstanding the China Yuan devaluation move that has rocked global financial markets and erased more than USD 5 trillion from equities worldwide, a leading official from the US Federal Reserve stressed that the world's top central bank remains poised for an interest rate lift-off sometime this year, clouding the outlook for Gold as a store of value.
While Atlanta Fed President Dennis Lockhart said that the outlook for a maiden rate hike in nine years was complicated by the China turmoil; dollar strength and oil collapse he still expects a hike in borrowing costs this year.
Gold failed to benefit from its safe haven status even as Asian markets extended a slide with stocks in China retreating nearly 8 per cent following yesterday's 8.5 per cent loss which wiped out USD 2.7 trillion from global equities.
At the MCX, Gold futures for October 2015 contract is trading at Rs 27,200 per 10 gram, down by 0.90 per cent after opening at Rs 27,300, against the previous closing price of Rs 27,448. It touched the intra-day low of Rs 27,155. (At 12:23 PM).