Global gold prices volatile

Apr 02 2014, 03:19 IST
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SummaryAfter hitting a seven-week low on Monday, gold prices saw some volatility in intraday trade on Tuesday, mainly because of bargain hunting and a weaker dollar.

After hitting a seven-week low on Monday, gold prices saw some volatility in intraday trade on Tuesday, mainly because of bargain hunting and a weaker dollar.

US June gold futures gained 70 cents an ounce at $1,287.40 at 1149 GMT, while spot gold remained almost flat at $1,284.30 an ounce. The metal gained from Federal Reserve chairperson Janet Yellen's comments that the central bank would continue monetary support for the US economy, which drove down the dollar against a basket of currencies. The metal is priced in the dollar, so any weakening of the greenback makes gold more attractive for users of other currencies.

In Delhi, in the absence of adequate physical buying, spot gold prices fell for a third straight day to R29,260 per 10 gm, down R40 from Monday.

Investors are now awaiting the outcome of the latest European Central Bank governing council meeting on Thursday and non-farm payrolls data of the US, expected on Friday, for specific indications of the likely movement of gold, the so-called haven asset.

Analysts said that despite a drop in prices, physical purchases of gold in leading consumers India and China haven't picked up much. In fact, futures prices of gold in China were trading at a discount to spot prices. The 99.99% purity gold on the Shanghai Gold Exchange was trading at a discount of $1 an ounce on Tuesday, compared with a discount of up to $8 last month, according to Reuters.

Meanwhile, New York-based SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, witnessed an outflow of 3.9 tonne on Monday, its sharpest one-day outflow in almost six weeks. This suggests investment demand for gold continues to remain fragile, after the metal's worst annual slide in 32 years last year.

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