Friday, August 14, 2015

Gold closes lower on strong US dollar

Gold futures ended lower in the domestic market on Thursday as investors locked into profits earned in the prior session and the People's Bank of China soothed markets by insisting there is no basis for further devaluation of the yuan. Sentiment weakened further as the US dollar regained bite after a top Fed official signaled that the world’s leading central bank remained on course for an interest rate lift-off in the near future despite the Yuan devaluation saga, dimming the luster for the bullion as a store of value. New York Fed President William Dudley stressed that while the China devaluation move had huge implications for the global economy, the Fed remains on track for a maiden hike in policy rates in nine years in the near future, with the exact timing for policy tightening dependent on the quality of economic data. A stronger dollar curbs demand for Gold as an alternative asset. Stronger greenback makes Gold more expensive for those holding other currencies, thus dimming demand. At the MCX, Gold futures for October 2015 contract closed at Rs 25,895 per 10 gram, down by 0.46 per cent after opening at Rs 25,882, against the previous closing price of Rs 26,014. It touched the intra-day low of Rs 25,835.

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