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Bullion bites the dust on dollar strength, Fed expectations

By Religare
|

Gold futures remained in bear terrain in the domestic market on Tuesday as investors and speculators exited positions in the precious metal tracking weakness in overseas markets as a stronger dollar cut the demand for Gold as an alternative asset.

Stronger greenback makes the bullion more expensive for those holding other currencies, thus dimming demand.

The dollar strengthened against a basket of key currencies amid speculation that the US Federal Reserve which maintained status quo on interest rates this month, may move later this year, and raise borrowing costs for the first time in almost a decade, taking toll on dollar-denominated commodities and sapping the lure for the yellow metal as a store of value.

 

Atlanta Fed President Dennis Lockhart warned that a rate hike may happen this year, amidst solid improvement in the world's biggest economy and the country's labour markets.

Gold may bounce back today as a sharp sell-off in global equities amid bleak China factory data bolsters the safe haven lure for the bullion.

At the MCX, Gold futures for October 2015 contract closed at Rs 26,238 per 10 gram, down by 0.41 per cent after opening at Rs 26,319, against the previous closing price of Rs 26,345. It touched the intra-day low of Rs 26,181

Story first published: Wednesday, September 23, 2015, 12:10 [IST]
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