Slump in investment demand pulls down bullion
11/11/2014 09:23
Gold futures closed lower in the domestic market on Monday as investors and speculators exited positions in the precious metal amid weakness in the overseas market after holdings in bullion-backed exchange traded products (ETP) tumbled to a five-year low, signaling weakening investment demand in the bullion. Holdings in the SPDR Gold Trust, the biggest bullion-backed ETP plunged 8 metric tons to the lowest level since August 2009 at 1,626.8 tons on Friday. A stronger dollar also dimmed the appeal of gold as an alternative asset. Stronger greenback makes gold more expensive for those holding other currencies, thus curbing demand. However, expectations that the US Fed may refrain from monetary tightening in the near –term boosted the precious metal’s appeal as a store of value. Federal Reserve Bank of Boston President Eric Rosengren said that the Fed should not raise borrowing costs until strong signs emerge that inflation is returning to the targeted 2 per cent. Gold futures may rise today amid strong physical demand for the bullion. Gold futures for December 2014 contract, at MCX, closed at Rs. 25,733 per 10 grams, down by 0.77 per cent, after opening at Rs. 25,958, against the previous closing price of Rs 25,932. It touched an intra-day low of Rs 25,660.
11/11/2014 09:23
Gold futures closed lower in the domestic market on Monday as investors and speculators exited positions in the precious metal amid weakness in the overseas market after holdings in bullion-backed exchange traded products (ETP) tumbled to a five-year low, signaling weakening investment demand in the bullion. Holdings in the SPDR Gold Trust, the biggest bullion-backed ETP plunged 8 metric tons to the lowest level since August 2009 at 1,626.8 tons on Friday. A stronger dollar also dimmed the appeal of gold as an alternative asset. Stronger greenback makes gold more expensive for those holding other currencies, thus curbing demand. However, expectations that the US Fed may refrain from monetary tightening in the near –term boosted the precious metal’s appeal as a store of value. Federal Reserve Bank of Boston President Eric Rosengren said that the Fed should not raise borrowing costs until strong signs emerge that inflation is returning to the targeted 2 per cent. Gold futures may rise today amid strong physical demand for the bullion. Gold futures for December 2014 contract, at MCX, closed at Rs. 25,733 per 10 grams, down by 0.77 per cent, after opening at Rs. 25,958, against the previous closing price of Rs 25,932. It touched an intra-day low of Rs 25,660.
