Gold rallied to up to two weeks on Tuesday on speculation that the European Central Bank may buying assets including gold holdings to offset inflation down.
The US dollar remained steady on Tuesday after officials from the European Central Bank posed the prospect of greater stimulation and as investors awaited to see if the leader of Japan could call early elections after the country went through recession.
A stronger greenbacks makes denominated gold for holders of other currencies and also undermines its appeal as hedges.
The ECB president Mario Draghi said Tuesday the non conventional actions may include buying a variety of assets to boost the economy. The central bank might theoretically buy sovereign debt, gold, exchange traded funds, real estate and even to offset a period of low inflation over time, said Executive Council member Yves Mersch, while warning against rushing in.
Gold for immediate delivery gained 0.9 percent to $ 1,197.52 an ounce in London, as to Bloomberg. It reached $ 1198.79 today, the highest since October 31.
Gold for December delivery gained 1.1 percent to $ 1,196.80 on the Comex in New York.
US economic data Monday also hurt the appeal of gold as hedges. While US manufacturing production increased by slightly, other data showed a rebound in manufacturing activity in the state of New York.
Holdings in SPDR Gold Trust, rose 0.33 percent to 723.01 tonnes on Monday, the first increase since November 3.
In China, SGE benchmark bullion spot contract was the highest since April 2013. Futures trading volume on the Comex was 42 percent above the 100-day average for this time of day, data compiled by Bloomberg.
In domestic market is visible a massive edge in gold and silver. Although, how much durable this gain, it’s the question everyone’s mind, because only mild weakness in the dollar, gold and silver bouncing on Comex and has had the effect on domestic trading. On MCX gold is currently trading around Rs 26,640.” 100McxTips bullion experts said.
The government could announce measures to curb imports of gold from Tuesday night, Bloomberg reported, citing an official from the Ministry of Finance.
On talks of Govt gold import curbs Gem and jewellery shares slip today. Titan Co. Ltd fell 1.3%, Tribhovandas Bhimji Zaveri Ltd 2% and PC Jeweller Ltd as much as 3.5%. Gitanjali Gems Ltd fell 0.9% and Shree Ganesh Jewellery House (I) Ltd fell 0.6%.
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