Prices of gold futures were higher on Monday on continuing uncertainty over China could let the yuan drop even further after the unexpected devaluation last week supported a safe haven demand for the precious metal.
U.S. gold futures for December delivery were up 0.41% to $1,117.3 an ounce. Spot gold was up 0.3 per cent at $1,116.55 an ounce.
The uncertainty about the impact of the devaluation of yuan last week on expectations of inflation worldwide and growth prospects in China have led to concerns that the Federal Reserve may keep of interest rates on hold in the short term more time.
The expectations of a rate increase this year, raising the opportunity cost of keeping gold as the dollar increases, pushed the metal to a minimum of 5-1 / 2 years $ 1.077 last month.
Gold tumbled to five and a half year low of $ 1072.30 on July 24 on speculation that the Federal Reserve would hike interest rates in September for the first time since 2006. But prices have since rebounded in hope for a US rate hike delayed.
Investors were seeking ahead to act of the Fed meeting July 28 to 29, which are expected would provide additional clarity on its plans to raise interest rates in the short term on Wednesday.
China’s central bank on Thursday said that there was no basis for further depreciation of the yuan, in a bid to reassure jittery global markets.
After hovering above Rs 24,500 per 10 gram, the MCX gold futures contract was trading Rs 25,945 on Monday. The contract will come under pressure if it breaks below Rs 25,350.
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