Gold futures prices declined on Thursday, as the dollar strengthened after minutes of the Fed’s October policy meeting indicated that officials said they believe the economic rebound is sufficiently strong to resist external threats to growth .
Dollar headed towards the highest close since March 2009 on the prospects for Japan to expand a program to encourage and after minutes of the meeting of the Federal Reserve from 28 to 29 October showed the US move towards higher interest rates. Most officials said the Fed should continue to pay regard to the evidence of a possible downward reversal in inflation expectations over the longer term, according to the minutes published yesterday.
Comex gold futures for delivery in December lost $ 8.20, or 0.69%, to trade at $ 1185.70 a troy ounce during early European morning trade hours.
Futures were likely to find support at $ 1146.00, the low of November 14 and resistance at $ 1204.10, the high of November 18. Trading volume in Comex futures was more than double the on average 100 days to this time of day, data compiled by Bloomberg.
As the minutes offered little clarity on when rates could start raising, the markets continued to wager that the US central bank will begin raising rates some time around September 2015.
Holdings in gold-backed exchange-traded products fell 1.9 metric tons to 1,616.7 tons yesterday, the lowest since May 2009.
The dollar index, which tracks the greenback against a basket of six major rivals, rose 0.32% to trade at 87.97.
The Indian rupee currency strengthened versus the dollar in afternoon trade on Thursday as hitting a nine-month low up in the morning due to the sale of dollars by banks and local exporters.
The yield on India’s 10-year benchmark bond was trading at 8.151%, compared with its Wednesday’s close of 8.164%. Bond yields and prices move in opposite directions.
A stronger dollar makes gold pricier for holders of the other currencies and blunts its appeal as a hedge.
In terms of Indian commodity market, MCX Gold and silver declined today. However, it has seen some reduction in early fall. Currently by 0.5 per cent drop on MCX gold is trading around Rs 26,600. While decline by 0.8 percent, silver is trading around Rs 36,000.
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