Gold futures logged modest gains in the domestic market on Monday as a lingering rout in global stock markets boosted the safe haven lure for the precious metal. Asian stock markets capped off their the worst monthly sell-off since May 2012 while US benchmark S&P 500 also posted its worst month in three years as spillovers from the turmoil in China shook Wall Street.
Gold which posted mild losses in the overseas market on Monday was supported by a softer dollar which boosted the demand for the bullion as an alternative asset. Weaker greenback makes Gold cheaper for those holding other currencies, thus bolstering demand.
However, the gains in the yellow metal were capped by renewed fears that the US Federal Reserve may move next month to undertake its maiden interest rate hike since 2006 as the world’s biggest economy shows notable improvement, dimming the lure for Gold as a store of value.
Stanley Fisher, the Fed’s Vice Chairman left the door open for policy tightening in September, as he saw acceleration in inflation while saying that it was too early to judge the impact of the China induced global market mayhem.
Gold may extend gains today as a worsening rout in equity shares in China signals more uncertainty over the global economic outlook, propping up safe haven demand for the precious metal.
At the MCX, Gold futures for October 2015 contract closed at Rs 26,682 per 10 gram, up by 0.22 per cent after opening at Rs 26,673, against the previous closing price of Rs 26,623. It touched the intra-day high of Rs 26,750.
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