Gold Futures Tumbles As Dollar, Equities Gains Curb Demand On Dovish Draghi Comments

Gold Futures Tumbles As Dollar, Equities Gains Curb Demand On Dovish Draghi Comments

US gold futures dropped to the lowest levels in a week on Thursday as the euro sank versus the dollar after European Central Bank President Mario Draghi said the central bank plans to broaden the scope of its stimulus program helped boost the dollar. In addition to global equities, reducing demand for the metal as an alternative asset.

On the Comex Gold for December delivery dropped $11.10, or 0.98%, to trade at $1,122.50 a troy ounce, heading for the biggest drop since Aug. 26. Prices slipped 0.5 percent yesterday.

The European Central Bank President Mario Draghi said the central bank will utilize all available tools, if necessary to spur the economy and increase inflation.

The comments came after the ECB maintained its benchmark interest rate to a record low of 0.05%. The central bank also maintained its marginal lending rate at 0.30% and maintained its deposit facility rate unchanged at 0.20%.

The central bank cut its growth and inflation forecasts due to the current declines in oil prices and the growth slowdown in China.

The euro lost 1% against the dollar, as the dollar index, which measures the strength of the greenback versus a basket of other major currencies, rose 0.6% to 96.47, the strongest level since 20 in August.

Holdings in exchange-traded products backed by gold dropped 0.9 to 1520.5 tons metric ton from Wednesday, according to data compiled by Bloomberg. The assets are near the lowest level since 2009.

Amid weak global trends, in the domestic front at the Multi Commodity Exchange, the October contract of gold fell by Rs 47, or 0.18%, to Rs 26,582 per ten grams in early morning futures trade.

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