Gold Update - Gold futures ended lower in the domestic market on Thursday as investors and speculators resorted to a cautious stance ahead of the US Federal Reserve’s two-day monetary policy meet next week in which the world’s top central bank is almost certain to raise interest rates for the first time since 2006, dimming the lure for the yellow metal as a store of value.
Fed officials recently have all expressed satisfaction with the US labour market recovery, and have signaled that the world’s biggest economy is ready to withstand the impact of monetary tightening.
Gold, a non-interest bearing asset, tends to lose sheen in a rising interest rate scenario. Weak cues from the overseas market also weighed on domestic sentiment as a stronger dollar and a rebound in equities curbed the lure for gold as an alternative asset. Stronger greenback makes gold more expensive for those holding other currencies, thus dimming demand.
Gold may extend losses today as traders stay cautious ahead of US retail sales and producer prices data which may show a strengthening recovery in the US economy.
At the MCX, Gold futures for February 2016 contract closed at Rs 25,418 per 10 gram, down by 0.72 per cent after opening at Rs 25,515, against the previous closing price of Rs 25,602. It touched the intra-day low of Rs 25,391.
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