Gold weakens on global cues and lackustre demand
Mumbai-India (July 2) Gold prices dropped to more than three-months lows at the domestic bullion market here today on consistent selling by stockist and weak local buying interest following bearish global cues. Gold had touched Rs 26,080 last on March 23.
Silver too dipped owing to heavy speculative unwinding amid reduced industrial offtake.
Standard gold (99.5 purity) slumped by Rs 215 to close at Rs 26,080 per 10 grams from Wednesday’s closing level of Rs 26,295.
Pure gold (99.9 purity) also fell by a similar margin to end at Rs 26,230 per 10 grams from Rs 26,445.
Silver (.999 fineness) dipped by Rs 225 to finish at Rs 36,005 per kg compared to Rs 36,230 previously.
On the global front, Gold fell to a four-week low in early trade today, extending losses into a third straight session due to a strong dollar ahead of US jobs data that could support expectations of the Federal Reserve lifting interest rates soon.
Spot gold slid to $1,159.60 an ounce, its lowest since March 18, and was trading 0.7 percent down at $1,161.06 by 1155 GMT.
It has lost about 1 percent in the previous two sessions.
The dollar hit a three-week high against a basket of major currencies, supported by strong U.S.
private employment data on Wednesday and weakness in the euro after Greece defaulted on a loan repayment to the International Monetary Fund.
With US markets closed on Friday for the July 4 Independence Day holiday, monthly non-farm payrolls data will be issued a day earlier than usual, along with durable goods numbers.
A stronger US currency makes dollar-denominated gold more expensive for foreign investors.
“Positive news from the US economy will support the view the Fed will hike rates in September,” Danske Bank senior analyst Jens Pedersen said.
“And given that a September hike is still not priced in by the market, it could certainly weigh on gold.” More encouraging data could prompt the Fed to raise rates sooner rather than later, hurting demand for non-yielding bullion.
Gold prices have been hamstrung by the prospect of higher US interest rates this year, which would increase the opportunity cost of holding the metal.