Bullion remains in firm Bear grip

Gold futures extended a prolonged losing streak in the domestic market on Tuesday as investors and speculators exited positions in the precious metal amidst heightened speculation that the US Federal Reserve will undertake a maiden interest rate lift-off since 2006, in the coming months, curbing the lure for the bullion as a store of value.

A leading official from the US Federal Reserve sees a strong likelihood of the world’s top central bank raising borrowing costs in September, with inflation showing signs of picking up towards the Fed’s goal and labour market on the upswing.

Federal Reserve St Louis President James Bullard has said that the odds of the Fed raising rates at its next policy meet in September are better than 50 per cent, backing up Fed Chair Janet Yellen’s recent statement which signaled an increased likelihood of a hike in borrowing costs at some point in 2015 amidst an improvement in the world’s biggest economy.

However, the losses in Gold were trimmed by a weaker dollar which boosted the demand for the yellow metal as an alternative asset. Weaker greenback makes Gold cheaper for those holding other currencies, thus bolstering demand.

Gold futures may trade on a cautious note today as traders eye key US housing data which will offer cues over the health of the world’s biggest economy.

At the MCX, Gold futures for August 2015 contract closed at Rs 24,987 per 10 gram, down by 0.19 per cent after opening at Rs 24,961, against the previous closing price of Rs 25,034. It touched the intra-day low of Rs 24,865.
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