Bullions TIps - The Yellow metal advanced almost 2 per cent in the domestic market on Friday tracking a bullish trend in the overseas market as sinking equities with China’s stocks entering a bear market and fresh concerns over the health of the American economy bolstered the demand for Gold as a safe haven asset.
Wall Street fell to a 15-month low as oil plunged below the USD 30 per barrel mark while a stock rout in China worsened, bolstering the appeal for the precious metal as an alternative asset. The Dow Jones Industrial Average sank 2.39 per cent; the Nasdaq Composite fell 2.74 per cent while S&P 500 declined 2.16 per cent. Signs of faltering growth in the world’s biggest economy raised doubts over the projected path of the US Federal Reserve’s interest rate hikes, bolstering the appeal of the bullion as a store of value.
US retail sales and factory production, both fell in December, manufacturing in the New York region contracted the most since the financial crisis and producer prices declined 0.2 per cent in December, a sign that the US economy was succumbing to a global slowdown, probably delaying further monetary tightening.
Weaker dollar also bolstered the demand for the bullion as an alternative asset. Weaker greenback makes Gold cheaper for those holding other currencies, thus boosting demand. Gold may extend gains today as a worsening stock rout in Asia amidst fears over the health of the world economy prompts a flight to safety, bolstering demand for Gold.
At the MCX, Gold futures for February 2016 contract closed at Rs 26,112 per 10 gram, up by 1.85 per cent after opening at Rs 25,658, against the previous closing price of Rs 25,637. It touched the intra-day high of Rs 26,215.
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