Stronger dollar makes gold more expensive for those holding other currencies, thus dimming demand Gold futures may fall today as a rebound in global equities dims safe haven appeal while robust US Q4 GDP data increased further taper bets. Gold futures for February 2014 contract, at MCX, closed at Rs. 29,378 per 10 grams, down by 1.21 per cent after opening at Rs. 29,789, against the previous closing price of Rs 29,738. It touched an intra-day low of Rs 29,353.
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Gold futures ended lower in the domestic market on Thursday as investors and speculators exited positions in the precious metal after the US Fed announced that it will taper its monthly bond buying program by USD 10 billion to USD 65 billion, undertaking a cut in QE for the second straight month, dimming the outlook for the bullion, which is a hedge against the inflationary risk of monetary stimulus.
The FOMC cited overall improvement in US labour market conditions and a pickup in economic growth in recent quarters, boosting case for tapering stimulus. However, the central bank reaffirmed its commitment to keep interest rates unchanged near zero well past the period when the jobless rate falls below 6.5 per cent, to support economic growth. Weak global cues also weighed on sentiment as gold futures fell in the overseas market as a stronger dollar dimmed the appeal of the precious metal as an alternative asset.
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