COMMODITY TIPS | Gold futures closed on a robust note in the domestic market on Friday as investors and speculators booked fresh positions in the precious metal tracking a bullish trend in the overseas market even as better-than-expected US jobs data pushed the case for a maiden interest rate hike since 2006, next week.
While the US economy added 211,000 jobs in November, compared to an upwardly revised 298,000 in October, the unemployment rate held steady at more than a seven-year low of 5 per cent, and average hourly earnings at private employers rose 0.2 per cent last month, against an uptick of 0.4 per cent in October.
While strong US jobs data has almost made it certain that the Fed will hike interest rates at its upcoming two-day policy meet on December 15-16, traders had already priced in a rate lift-off last week when Fed Chair Janet Yellen had stressed that the US economy was ready for higher borrowing costs.
Philadelphia Fed President Patrick Harker stressed that the Fed should raise interest rates “sooner rather than later” to allow a gradual pace of future increases. Gradual pace of tightening may support Gold- a non-interest bearing asset, and which tends to lose sheen in a rising interest rate scenario.
Gold’s gains came even amidst a strengthening dollar which tends to curb the appeal of the bullion as an alternative asset. Stronger greenback makes gold more expensive for those holding other currencies, thus dimming demand.
The yellow metal may extend a rally today as ECB President Mario Draghi signaled that the Frankfurt-based central bank will add stimulus as needed.
At the MCX, Gold futures for December 2015 contract closed at Rs 25,065 per 10 gram, up by 0.51 per cent after opening at Rs 25,095, against the previous closing price of Rs 24,937. It touched the intra-day high of Rs 25,685.