Bullion dips as Fed raises interest rate estimates
18/09/2014 09:26
Gold futures closed lower in the domestic market on Wednesday as investors and speculators exited positions in the precious metal tracking a weak trend in the overseas market after US Federal Reserve raised its estimates for interest rates at the end of next year, dimming the appeal of the bullion as a store of value.
The Fed which re-affirmed its commitment to keep interest rates low for a considerable time, raised its median estimate for the federal funds rate by 25 basis points at the end of 2015 to 1.375 per cent, up from 1.125 per cent in June. The Fed, which is tipped to wrap up QE by October, pared its monthly bond buying program by USD 10 billion, dimming the appeal of gold, a hedge against the inflationary risk of monetary stimulus.
A stronger dollar dimmed the appeal of gold as an alternative asset. Stronger greenback makes the bullion more expensive for those holding other currencies, thus dimming demand.
US consumer prices fell for the first time in over a year, down 0.2 per cent in August over the previous month, denting gold’s appeal as an inflation hedge. Gold futures may fall today after the Fed hiked its interest rate projections.
Gold futures for October 2014 contract, at MCX, closed at Rs. 26,901 per 10 grams, down by 0.20 per cent, after opening at Rs. 27,001, against the previous closing price of Rs 26,954. It touched an intra-day low of Rs 26,865.
18/09/2014 09:26
Gold futures closed lower in the domestic market on Wednesday as investors and speculators exited positions in the precious metal tracking a weak trend in the overseas market after US Federal Reserve raised its estimates for interest rates at the end of next year, dimming the appeal of the bullion as a store of value.
The Fed which re-affirmed its commitment to keep interest rates low for a considerable time, raised its median estimate for the federal funds rate by 25 basis points at the end of 2015 to 1.375 per cent, up from 1.125 per cent in June. The Fed, which is tipped to wrap up QE by October, pared its monthly bond buying program by USD 10 billion, dimming the appeal of gold, a hedge against the inflationary risk of monetary stimulus.
A stronger dollar dimmed the appeal of gold as an alternative asset. Stronger greenback makes the bullion more expensive for those holding other currencies, thus dimming demand.
US consumer prices fell for the first time in over a year, down 0.2 per cent in August over the previous month, denting gold’s appeal as an inflation hedge. Gold futures may fall today after the Fed hiked its interest rate projections.
Gold futures for October 2014 contract, at MCX, closed at Rs. 26,901 per 10 grams, down by 0.20 per cent, after opening at Rs. 27,001, against the previous closing price of Rs 26,954. It touched an intra-day low of Rs 26,865.
