Last week, spot gold prices declined by 1.2 percent to close at $124 1.2 per ounce on signs that central banks may scale back their ultra – loose monetary policy pushed bond yields higher on both sides of the Atlantic, though a decline in the dollar to its lows for the year lent support.
A raft of hawkish comments from central banks this week signalled the era of easy money, which helped gold hit record highs at $1,920.30 an ounce in 2011, might be coming to an end in more places than just the United States. On the MCX, gold prices declined by 1 percent to close at Rs.28 439 per 10gms.
The contrasting factors of dollar weakness and winding up of easy monetary policies by central banks on both sides of the Atlantic are exerting downside pressure on the yellow metal. Weak investment demand is further acting as a negative factor for gold. On the MCX, we expect gold prices to trade lower as international markets are trading lower by 0.3 percent at $1246 per ounce.