Gold Adds to Gains More Than $10 on Softer Dollar Amid Fed Rate Hike Doubts

Gold Adds to Gains More Than $10 on Softer Dollar Amid Fed Rate Hike Doubts

Prices of gold futures jumped more than $ 10 on Monday, adding to the strong gains the previous session, as the weakness of the dollar and amid equal cynicism about whether of the Federal Reserve to raise interest rates so much as it would like next year.

Gold for February delivery on the Comex tacked on $11.50, or 1.08%, to trade at $1,076.30 a troy ounce.

Spot gold had ticked up 0.3 percent to $1,069 an ounce, adding to the 1.4 percent gain on Friday.

The Fed raised interest rates for the first time since 2006 last week, in a widely expected decision. Speaking at a news conference after announcing, the Fed President Janet Yellen, vowed the FOMC will not be mechanical in their approach to normalize monetary policy and concluded that further rate increases would be gradual and dependent on the data.

According to its latest medium projection, the FOMC expected the Fed Funds Rate will reach 1.375% by the end of 2016, which involves four quarter-point hikes next year. However, the future of the Fed funds currently suggests that there will be only two rate hikes in 2016, one in June and another in December.

A gradual process to increased rates poses little threat to gold prices a rapid series of increases.

The US dollar index, which measures the strength of greenback versus a trade-weighted basket of six major currencies, was at 98.55, off two weeks maximum of 99.33 last week.

Gold continued to climb Friday a loss of 2 percent in the session before that, one day more metal loss in five months as the Federal Reserve raised interest rates in the United States for the first time in nearly a decade.

In the pre-Fed move period, speculators built record a bearish bet on COMEX gold, US data Commodity Futures Trading Commission showed on Friday, a factor that could trigger a short-covering.

Rupee against the dollar has accelerated the fifth day in a row. Rupee gains 12 paise to close at the 66.27 level.

However, despite the strong rupee is seeing a rise in gold. MCX gold with a gain of 0.5 per cent is trading at Rs 25,250.

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