Commodity Updates - Gold prices fell as investors remained cautious ahead of this month's Federal Reserve review of interest rates. Investors have digested strong suggestions from the Federal Reserve that it will raise short-term interest rates at some point this summer. Any rate hikes by the Fed this year are viewed as bearish for gold, which struggles to compete with high-yield bearing assets in rising rate environments. Prices also fell as the European Central Bank and OPEC ended a pair of closely-watched meetings on Thursday without enacting any major policy changes.
However, a weaker dollar raised the appeal of gold as an alternative asset. Weaker greenback makes the bullion cheaper for those holding other currencies, thus increasing demand.
Gold futures were trading little changed during noon trade in the domestic market on Friday as traders stuck to a cautious approach ahead of the US jobs data which may dictate the timing of the next Fed interest rate hike . The world’s biggest economy is tipped to have added a robust 160K jobs in May with the unemployment rate slipping to 4.9 per cent, analysts’ estimates showed. A bullish jobs report may bolster the case for the Fed to raise borrowing costs as early as June, a move which may hurt gold’s appeal as a store of value.
Meanwhile, ADP reported that American private employers added 173,000 workers in May, up from 166,000 in April.
At the MCX, Gold futures for June 2016 contract is trading at Rs 28,603 per 10 gram, up by 0.04 per cent after opening at Rs 28,600, against the previous closing price of Rs 28,591. It touched the intra-day high of Rs 28,615.
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