Gold Dips As Dollar Gains Ground

Gold futures closed lower in the domestic market on Thursday with the dollar gaining ground against most currency rivals and U.S. equities trading mostly higher after Federal Reserve Chairwoman Janet Yellen offered a second day of congressional testimony on monetary policy.

Gold prices have been posting gains since a solid U.S. jobs report issued late last week, which backed the argument for higher interest rates although likely not at a more aggressive pace than the go-slow approach the Fed has signaled. Still, the prospect for gold-negative interest-rate hikes had sent the yellow metal to their lowest level in about four months last week.

Rising real interest rates lower the attractiveness of holding gold because the metal provides no yield, and entices investors to rotate into riskier assets like stocks. Higher rates may also boost the value of the dollar which usually moves in the opposite direction of the gold price.

At the MCX, gold futures for August 2017 contract ended at Rs 27845 per 10 grams, down by 0.02 per cent, after opening at Rs 27,950 against a previous close of Rs 27,851. It touched the intra-day low of Rs 27,812.

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Suhani Verma

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