Bets on US tapering stimulus package next month may drag gold

Gold prices in the domestic spot and futures market may drop after the yellow metal slipped in the global market to a month’s low. Speculation is rife that the US could begin cutting its $85-billion-a-month economic stimulus programme from as early as next month.
However, two US Federal Reserve officials — Federal Reserve Bank of Atlanta President Dennis Lockhart and President of Minneapolis Fed Narayana Kocherlakota — said that the policy should continue to help further growth and ensure full employment. In India, gold prices have been surging despite the downtrend in the global market mainly owing to the rupee’s weakness. Besides, supply-side woes are ensuring premium for gold in India.
However, with prices topping Rs 31,000 for 10 gm, demand could be restricted. That, in turn, could lead to some softening of prices.
Rupee movement
The rupee’s movement will also be a factor in ensuring how gold progresses since any fall in the Indian currency against the dollar will make import of gold, crude oil and vegetable oils costlier. Gold holdings in exchange-traded funds, particularly world’s largest SPDR Trust, were unchanged.
Spot gold, gold futures
In early Asian trade, spot gold traded at $1,269.44 an ounce and gold futures contract maturing in December at $1,268.50. Gold for jewellery (99.5 per cent purity) in the domestic market was up at Rs 31,180 for 10 gm and pure gold (99.9 per cent purity) at Rs 31,330. On MCX and NCDEX, gold December contracts are likely to slip towards Rs 30,000.
Source: Hindu business line

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