Gold drops as ECB holds interest rates steady

Gold prices fell by 0.25 per cent on Friday in the midst of a relatively flat dollar, as the European Central Bank held interest rates steady at a highly-anticipated meeting on Thursday, while hinting that rates could be cut again in the short-term future. The ECB's Governing Council left its benchmark interest rate for the euro zone at a record-low of zero. Gold futures for June 2016 contract, at MCX, were trading at Rs. 29,285 per 10 grams, down by 0.25 per cent after opening at Rs. 29,373 against the previous closing price of Rs. 29,357. It touched the intra-day low of Rs. 29,271 till the trading.
 

However, a stronger dollar reduced the appeal of gold as an alternative asset. Stronger greenback makes the bullion expensive for those holding other currencies, thus reducing demand.

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