Gold Makes Solid Gains Internationally: Here's What Propelling It Higher

Gold which after recoveing from the lows of $1700 per oz was trading in a range bound fashion is now gaining ground. First, the US Fed's in-line rate hike pushed the glistering metal's price higher. This was largely as some of the experts anticipated.

Also, there had been trending a view that amid likely recession facing the world's most developed economy, the US Fed is in fact close to the end of the monetary tightening spree than near to its start. Higher interest rates in the economy weigh on the non-interest yielding bullion as the opportunity cost of holding bullion in such a situation increases.

Now in the latest trigger, the US economy has contracted for the second straight quarter. The Commerce department on Thursday said that the US GDP contracted by 0.9% in the second quarter and missed market expectations of a 0.4% increase.

"The decrease in real GDP reflected decreases in private inventory investment, residential fixed investment, federal government spending, state and local government spending, and nonresidential fixed investment that were partly offset by increases in exports and personal consumption expenditures," the report said.

So, on the development, gold in the international market is seen holding strong gains and last at around 1:37 pm, spot gold traded at $1765.5, up 0.5%.

While there is no official announcement of recession hitting the US, traditionally, the recession is said to be hit if the nation witnesses contraction for 2 straight quarters.

Therefore, as economic and geo-political news is positive news for gold, it is seen gaining ground.

Also, on the MCX, gold August futures topped Rs. 51,500 per 10 gm.