Fed meet plunges gold rate
Gold is once again on a decline following three year trend.
Mumbai: Gold is once again on a decline following three year trend. It lost 9.8 per cent of its value this year and touched a five-year low last Thursday though it bounced back to $1.075 an ounce on Friday from around $1,063 on Thursday, said Prithviraj Kothari, MD Riddhi Siddhi Bullion.
Prices fell on Thursday as a stronger dollar reduced the appeal of the metal as an alternative asset, he said, adding that traders are expecting borrowing costs will be increased at the Fed meeting on December 15-16. If they increase the rate, it would dull the appeal of bullion because it doesn’t pay interest.
Praveen Shankar Pandya, chairman, Gem and Jewellery Export Promotion Council says “markets will fall but will bounce back a bit if Fed rates are raised by only 25 basis points. But if it is more than that then there would possibly be a major correction. Mr Kothari also says “If the Fed raises rates, gold will witness immense volatility. However, if the Fed does not increase rates then gold prices could could go up to $1,150 an ounce.” He added, “While investors widely expect the Federal Reserve to raise interest rates at its meeting, they anticipate the pace of increases to be gradual amid concerns over tepid growth overseas and divergent monetary policies between the US and other nations,” he said. RBI governor expects a 25 basis points hike.
( Source : deccan chronicle )
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