Gold Futures Surges On Weak US Data

Gold futures closed higher in the domestic market on Friday with the dollar losing ground against most currency rivals following disappointing economic data which indicated that US economic growth is not growing as previously anticipated.

Yellow metal was under storm for last few sessions after hawkish Fed stance following a solid US 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 27,990 per 10 grams, up by 0.55 per cent, after opening at Rs 27823 against a previous close of Rs 27,837. It touched the intra-day high of Rs 28,073.

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Suhani Verma

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