Bullions Tips - Gold futures surged by more than 1 per cent in the domestic market on Wednesday as investors and speculators booked fresh positions in the precious metal tracking a bullish trend in the overseas market where the bullion settled at a 15-week high as a plunge in the dollar to over a seven-week low against major currencies bolstered the appeal of Gold as an alternative asset.
Weaker greenback makes the yellow metal cheaper for those holding other currencies, thus bolstering demand.
Soft US economic data pushed back bets of a further increase in interest rates by the US Federal Reserve, bolstering the lure for the bullion as a store of value. While services activity in the US expanded at the slowest pace in two years with the PMI falling at 53.5 in January 2016 from 55.8 in December 2015, the country’s private employment growth came in at 205,000, down from 267,000 in December.
The latest data raised speculation that the Fed, which undertook a maiden lift-off in interest rates since 2006 in December, may not raise borrowing costs this year as the world’s biggest economy slows amidst heightened global headwinds.
Gold may extend gains today amidst rising bets of the Fed holding off further policy tightening for the next several months.
At the MCX, Gold futures for February 2016 contract closed at Rs 27,198 per 10 gram, up by 1.14 per cent after opening at Rs 27,035, against the previous closing price of Rs 26,891. It touched the intra-day high of Rs 27,240.
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