Gold Futures Soared By more than 3% in the Domestic Market

Bullions tips - Gold futures soared by more than 3 per cent in the domestic market on Monday, marking the highest settlement since June in the overseas market as investors sought shelter in the safety of the yellow metal amidst a renewed rout in oil prices which dipped below USD 30 per barrel, rekindling worries over the health of the global economy.

A plunge in equities and weaker dollar bolstered the appeal of the bullion as an alternative asset. Wall Street sank on Monday with benchmark S&P 500 hitting a 22-month low and Nasdaq Composite approaching a bear market, as traders fret over a faltering world economy amidst a China slowdown and an ongoing commodity slump. Weaker greenback also bolstered gold demand by making the yellow metal cheaper for those holding other currencies.

Physical demand for Gold improved amidst the ongoing China Lunar New Year festivities when gold purchases in the world’s second biggest economy tend to pickup. Hopes that the US Federal Reserve may delay tightening interest rates further following a maiden lift-off in borrowing costs in December since 2006 also boosted the lure for the precious metal as a store of value. A slowdown in job growth in January signaled slight headwinds to the US labour market recovery, bolstering the case for the Fed to put off policy tightening for some time.

Gold futures may extend gains today as a continued global equity rout bolsters gold’s investment appeal.

At the MCX, Gold futures for April 2016 contract closed at Rs 28,458 per 10 gram, up by 3.39 per cent after opening at Rs 27,578, against the previous closing price of Rs 27,524. It touched the intra-day high of Rs 28,527.