Gold futures lose sheen after FOMC minutes
22/05/2014 09:29
Gold futures slumped in the domestic market on Wednesday as higher US equities dimmed the appeal of the precious metal as an alternative asset. A slump in investment demand also weighed on the precious metal as holdings in the SPDR Gold Trust, the world’s biggest bullion-backed exchange traded product (ETP) fell to the lowest level since December 2008, down by 0.4 per cent at 776.89 metric tons on Wednesday. Selling pressure accelerate further after the US Federal Reserve minutes signaled muted inflation risk from its monthly bond buying program, denting gold’s appeal as a hedge against inflation. The FOMC minutes showed that inflation is expected to remain well below the 2 per cent target. The Fed members discussed a range of possible tools for the eventual tightening of monetary policy once they decide to start raising interest rates, a sign that the time for a rise in borrowing costs wasn’t too far away, dimming the appeal of gold as a store of value. Gold futures may continue the downward journey as prospects of continued tapering of QE by the Fed dim gold’s appeal as a hedge against the inflationary risk of monetary stimulus. Gold futures for June 2014 contract, at MCX, closed at Rs. 27,373 per 10 grams, down by 2.88 per cent, after opening at Rs. 28,245 against the previous closing price of Rs 28,186. It touched an intra-day low of Rs 27,341.
22/05/2014 09:29
Gold futures slumped in the domestic market on Wednesday as higher US equities dimmed the appeal of the precious metal as an alternative asset. A slump in investment demand also weighed on the precious metal as holdings in the SPDR Gold Trust, the world’s biggest bullion-backed exchange traded product (ETP) fell to the lowest level since December 2008, down by 0.4 per cent at 776.89 metric tons on Wednesday. Selling pressure accelerate further after the US Federal Reserve minutes signaled muted inflation risk from its monthly bond buying program, denting gold’s appeal as a hedge against inflation. The FOMC minutes showed that inflation is expected to remain well below the 2 per cent target. The Fed members discussed a range of possible tools for the eventual tightening of monetary policy once they decide to start raising interest rates, a sign that the time for a rise in borrowing costs wasn’t too far away, dimming the appeal of gold as a store of value. Gold futures may continue the downward journey as prospects of continued tapering of QE by the Fed dim gold’s appeal as a hedge against the inflationary risk of monetary stimulus. Gold futures for June 2014 contract, at MCX, closed at Rs. 27,373 per 10 grams, down by 2.88 per cent, after opening at Rs. 28,245 against the previous closing price of Rs 28,186. It touched an intra-day low of Rs 27,341.
