Gold prices slide to two-month low
The key driver for gold right now is the dollar. This week the US currency strengthened, even as the US Fed was dovish on interest rates
Spot gold prices eased further on Thursday to a two-month low as doubts over the yellow metal’s festive demand continued to outweigh other factors, including an uncertain global economic outlook and rising unemployment. The precious metal closed at ₹49,638 per 10gm on the MCX, down ₹613. India is the second biggest consumer of gold after China. October gold futures were down 0.45% to ₹49,293 per 10 gram. In four days, gold has lost around ₹2,500 per 10 gm
Notwithstanding the recent weakness, which has come after lifetime highs for gold, analysts and traders are optimistic on the price outlook. The key driver for gold right now is the dollar. This week the US currency strengthened, even as the US Fed was dovish on interest rates.
Chirag Mehta, senior fund manager, Quantum Asset Management Co., said: “Interest rates in the developed world are close to zero or negative. Central banks clearly signalled that the rates will remain low for a fairly long time. Usually, the real interest rate is the driver of gold. So if the interest rate remains close to zero it will drive many towards assets like gold, which will push prices up.” The weekly jobless claims report in US showed nearly 30 million people were on unemployment benefits at the end of August. This increased expectations that more stimulus will be given by governments and central banks to revive the economies. “Central banks will keep pushing for more liquidity and that will be positive for gold,” said Mehta.
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