Gold futures retreated sharply in the domestic market on Tuesday as investors and speculators exited positions in the precious metal tracking a weak trend in the overseas market as a stronger dollar dimmed the appeal of the bullion as an alternative asset. Stronger greenback makes Gold more expensive for those holding other currencies, thus dimming demand.
A rebound in equities amidst speculation that the China induced global mayhem may have been overdone weakened the safe haven lure for Gold as the Dow Jones Industrial Average surged 0.72 per cent; the Nasdaq Composite advanced 1.03 per cent while S&P 500 rose 0.78 per cent. Fears that an economic slowdown in China may crimp demand for precious metals also hit Gold futures.
Strong US economic which showed that the number of job openings rose in November, consumer confidence climbed in January and small business optimism rose in December, signaled resilience in the world’s biggest economy, bolstering the case for further monetary tightening this year, dimming the lure for Gold as a store of value. Atlanta Federal Reserve Bank President Dennis Lockhart justified the case for more interest rate hikes in 2016 amidst solid US economic growth.
Gold futures may extend a dip today after a surprise rebound in China’s exports eased concerns over the world’s second biggest economy, tempering safe haven demand for the yellow metal.
At the MCX , Gold futures for February 2016 contract is trading at Rs 25,674 per 10 gram, down by 0.76 per cent after opening at Rs 25,883, against the previous closing price of Rs 25,870. It touched the intra-day low of Rs 25,614.
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