Bullion Updates – Gold Drops 0.45 pct as dollar Extends Gains

Gold prices fell by 0.45 per cent on Wednesday as the US dollar staged a recovery after a pair of Federal Reserve officials talked up US interest rate hikes this year. Atlanta Fed President Dennis Lockhart said the US could see two further interest rate rises this year, while San Francisco Fed President John Williams said that he would support an interest-rate hike in June as long as he sees continued progress on the economy, inflation and jobs.

Gold futures for June 2016 contract, at MCX, were trading at Rs. 30,087 per 10 grams, down by 0.45 per cent after opening at Rs. 30,150 against the previous closing price of Rs. 30,224. It touched the intra-day low of Rs. 30,065 till the trading.

A stronger dollar reduced the appeal of gold as an alternative asset. Stronger greenback makes the bullion expensive for those holding other currencies, thus reducing demand.

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