Bullions Tips - Gold futures closed higher in the domestic market on Wednesday on short covering by speculators while a sharp depreciation in the Indian rupee against the US dollar also exerted upward pressure on domestic bullion prices.
However, the gains in the bullion were limited by rising speculation that the US Federal Reserve will raise interest rates for the first time in nearly a decade, next month, curbing the lure for the yellow metal as a store of value.
Gold, a non-interest bearing asset tends to lost in a rising interest rate scenario. A surge in US payrolls in October and robust consumer spending has bolstered the case for a rate lift-off.
Gold may slip back into losses today as the US Federal Reserve minutes signaled that policy tightening may be appropriate in December, even as the minutes warranted a gradual pace of rate hikes.
The minutes also reaffirmed the Fed’s faith in the world’s biggest economy with most policymakers indicating that economic conditions for a maiden interest rate hike since 2006 will be met by the Fed’s upcoming meet in December. At the MCX, Gold futures for Dec 2015 contract closed at Rs 25,094 per 10 gram, up by 0.26 per cent after opening at Rs 24,997, against the previous ending price of Rs 25,028. It touched the intra-day high of Rs 25,174.
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