Bullions tips - Gold futures retreated in the domestic market on Friday as investors and speculators exited positions in the precious metal as the Bank of Japan’s (BOJ) decision to introduce negative interest rates to help bolster Japan’s economy renewed the appetite for riskier assets, and eroded the appeal of the bullion as a safe haven asset.
The apex bank introduced a rate of minus 0.1 per cent on certain excess holdings of cash to spur lending while maintaining its record asset purchase program which includes its 80 trillion yen annual government bond purchases.
The BOJ’s fresh policy easing move buoyed equity markets with benchmarks at Wall Street registering gains of over 2 per cent, thereby dimming the lure for Gold as an alternative asset. However, the losses in the bullion were stemmed by soft US Q4 GDP data which pushed back bets of a near-term interest rate hike by the US Federal Reserve, bolstering the appeal of Gold as a store of value. The world’s biggest economy expanded 0.7 per cent annualized rate in the October-December 2015 quarter after a 2 per cent growth in Q3.
Gold may trade on a cautious note today ahead of US factory data which may show contraction in the country’s manufacturing activity in January. At the MCX, Gold futures for February 2016 contract closed at Rs 26,638 per 10 gram, down by 0.27 per cent after opening at Rs 26,665, against the previous closing price of Rs 26,710. It touched the intra-day low of Rs 26,485.
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