Gold Drops As Dollar Hits 1-Week High

Gold prices fell in the international market, as the dollar hit a 1-week high. Spot gold was down 0.5 per cent at $1,417 per ounce, while US Gold Futures slipped 0.5 per cent to $1439 an ounce.

Domestic gold in the Indian market has also rallied along with global gold prices, with the pure metal now trading near Rs 36,000 per 10 grams. Investors and analysts see some selling pressure in gold, after the sharp spike in the domestic and Indian markets.

What has also kept gold prices rallying, is the fact that the US Fed is likely to increase interest rates going ahead. The US Fed is likely to meet on July 31, to consider a rate decision. In all probability it would cut interest rates by 25 basis points. Not only the US Fed, but marketmen are expecting an easing from most central banks including the Indian central bank and the European Central Bank.

A drop in interest rates is always considered good for gold, as individuals move money from fixed interest yielding instruments to gold.

Meanwhile, analysts are now suggesting a buy on silver, as the precious metal has not rallied a great deal. However, most precious metals tend to give ordinary returns.

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