Bullion Updates - Gold Regains Its Shine On Safe Buying

Bullions tips - Gold futures advanced in the domestic market on Wednesday as anxiety over China and a deteriorating global economic outlook prompted a flight to safe haven assets, bolstering the lure for the bullion. A plunge in equities bolstered the appeal of Gold as an alternative asset.

The Dow Jones Industrial Average fell 2.21 per cent; the Nasdaq Composite tumbled 3.41 per cent while S&P 500 tanked 2.5 per cent as investors turned increasingly bearish amidst a global slowdown on China jitters and a worsening commodity slump. Speculation that volatility in global financial markets and a China slowdown may slow the pace of Fed interest rate tightening also boosted the demand for the precious metal as a store of value.

Boston Federal Reserve Bank President Eric Rosengren stated that slowing US and global economic growth may warrant a more gradual pace of rate hikes than what the Fed policymakers currently expect. Weak oil prices, a China stock rout that has engulfed global markets, concerns over a domestic US slowdown, coupled with weak inflation readings could force the Fed to go easy on further interest rate lift-offs following the maiden rate hike since 2006 in December.

Gold may extend gains today as a freefall in Asian equities amidst fears that China’s economy may slow further spurs safe haven demand. At the MCX, Gold futures for February 2016 contract is trading at Rs 25,735 per 10 gram, up by 0.24 per cent after opening at Rs 25,620, against the previous closing price of Rs 25,674. It touched the intra-day high of Rs 25,790.