Gold futures advanced in the domestic market on Thursday as investors and speculators booked fresh positions in the precious metal as a downward revision in inflation in the 19-member Euro area economy upped the case for the European Central Bank (ECB) to bolster its monetary easing program when it meets next month, boosting the bullion’s appeal as a hedge against the inflationary risk of monetary stimulus.
Euro area consumer inflation stood at 0.3 per cent in January 2016, compared to an earlier reported 0.4 per cent, well below the ECB’s around 2 per cent target.
Meanwhile, investors weighed comments from top Federal Reserve officials as they look for cues over when the world’s top central bank will raise interest rates further after December’s initial lift-off.
Federal Reserve Bank of St. Louis President James Bullard said that it was unwise to raise interest rates over the course of the year in the environment of declining market-based inflation expectations, and financial market volatility.
San Francisco Fed President John Williams stressed that the Fed should follow a broad policy of gradual interest rate tightening with the number of rate hikes in the current monetary tightening cycle dependent on inflation and other economic data.
Gold may trade on a cautious note today ahead of US Q4 GDP data and consumer spending data.
At the MCX, Gold futures for April 2016 contract closed at Rs 29,774 per 10 gram, up by 0.74 per cent after opening at Rs 29,475, against the previous closing price of Rs 29,554. It touched the intra-day high of Rs 29,820.
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