Tuesday, August 18, 2015

Bullion Regains its Polish on Fed Speculation

Gold futures rallied by more than 1 per cent in the domestic market on Monday as investors and speculators booked fresh positions in the expensive metal throughout speculation that the US Federal Reserve may refrain from raising interest rates in September following the turmoil caused by the depreciation of the Yuan which threatens to cause more global instability and strengthen the dollar, bolstering the lure for the bullion as a store of value.Further, manufacturing in New York City contracted at the fastest pace since the Great Recession, in August while gains in US producer prices slowed in July, bolstering the case for the Fed to delay tightening of interest rates which have been on hold since 2006.Further, China increased its bullion reserves by more than 19 tonnes in July, the country’s central bank revealed, signaling a pickup in demand for the yellow metal in the world’s second biggest bullion consumer. China’s gold reserves at the end of July stood at 1,677.30 tonnes, up by 1.16 percent from June's 1,658 tonnes.Meanwhile, a contraction in Japan’s economy signaled the fast growing gloom surrounding the world economy, boosting the safe haven demand for the bullion. The world’s third biggest economy shrank at an annualized pace of 1.6 per cent in the April-June 2015 quarter.Gold may trade on a cautious note today as traders eye the minutes from the Fed’s latest meet set for release tomorrow.
At the MCX, Gold futures for October 2015 contract closed at Rs 26,032 per 10 gram, up by 1.02 per cent after opening at Rs 25,880, against the previous closing price of Rs 25,768. It touched the intra-day high of Rs 26,087.

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