US gold futures sold off sharply on the Wednesday suffering its biggest daily drop in over six weeks old, amid widely stronger US dollar and the introduction of new stimulus measures by China to revive its struggling economy.
On the Comex Exchange, gold December futures delivery wavered between $1,101.20 and $1,124.70 before closing near session-lows at $1,101.50, down 19.50 or 1.74% on the session. Meanwhile, gold was trading 0.4% higher at $1,125.48 an ounce in Singapore.
In Beijing, the Chinese Ministry of Finance said it would introduce “more robust” fiscal steps in order to promote slowing economic growth, which is expected to remain at the lowest rate in more than a decade during the third quarter. Steps include a potential tax reduction for small businesses and the allocation of funds for infrastructure projects. As part of the proposal, the Ministry approved two rail projects worth nearly 70 million yuan, or $ 11 billion.
It came a day after China said its exports in dollars sold off sharply by 5.5% on a year over year basis in August, adding to worries about weakness in the second biggest economy in the fully persistent world.
Imports, meanwhile, fell 13.8% on an annual basis, producing a trade surplus of $ 60,240,000,000. On Wednesday, the Shanghai Composite Index closed 2.3% gain from a previous session range. China is the world’s largest gold producer and second largest consumer behind India.
Gold, which does not bind to the dividend interest rates, fight or compete with assets of high-performance bearings in increasing the types of environments.
The dollar index, which measures the strength of the greenback versus a basket of six major currencies, jumped more than 0.45% to an intraday high of 96.42 before falling back slightly in afternoon trading.
Dollar-denominated raw materials like the gold becomes more expensive for foreign buyers when the dollar appreciates.
Amid positive cues from global markets, the yellow metal for delivery in October contract rose Rs 33, or 0.12%, at Rs 26,457 per 10 grams at Multi Commodity Exchange.
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