 "Gold up on Fed's dovish tone on interest rates")
Gold’s price bounced back on Wednesday after hitting the lowest in six weeks after the US Federal Reserve’s change in stance over growth.
Standard gold jumped by Rs 180 at Zaveri Bazaar here to Rs 28,370 per 10g on Wednesday. In London, gold gained nearly two per cent in overnight trade on Tuesday, after Fed chair Janet Yellen reasserted the US central bank’s gradual approach to raising rates. Yellen’s statement took markets by surprise, after the statement by a Fed official last week who'd held economic growth was satisfactory. That had strengthened the dollar against global major currencies and pulled down gold to $1,218 an ounce on Tuesday, before Yellen’s speech. Gold recovered in London to trade at $1,242 an oz after Yellen’s observations and traded flat on Wednesday; the dollar weakened.
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Spot gold prices were trading marginally lower on Wednesday in global markets. Gold edged back below $1,240 an oz as investors cashed in some of the previous day's 1.7 per cent gain.
In her first comments since the Federal Reserve opted to keep rates on hold two weeks earlier, Yellen said inflation had not yet proven durable against the backdrop of global risks to the US economy, including depressed oil prices and worries over China. , “Although the baseline outlook has changed little on balance since December, global developments pose ongoing risks. These risks appear to have contributed to the financial market volatility witnessed both last summer and in recent months,” she said.
"The comments are a positive for gold prices, while strength in investment demand for the yellow metal in recent weeks is also seen in inflows in gold holdings in the SPDR Gold Trust,” said Prathamesh Mallya, senior analyst at Angel Broking. Gold for delivery in April on the comex division of the New York Mercantile Exchange reacted by jumping $16.5 or 1.4 per cent to $1,236.60 an oz. Assets in the SPDR Gold Trust, the world’s largest gold–backed exchange-traded fund, fell 0.4 per cent to 820.47 tonnes on Tuesday, the first drop in two weeks.
In most markets in India, buyers were deprived from buying because of the strike in the trade against the new excise duty. However, jewellers in south India have started withdrawing and some have begun registration with the excise department here. A senior official with the office of the commissioner of central excise here said 24 jewellers had obtained their registration so far. Industry sources say those seeking excise registration are largely from the organised sector, with branded jewellery as their main business portfolio.
