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Gold gains 1% on ECB boost

After hovering around a four-month low, gold gained 1% in intraday trade on Thursday after the European Central Bank reduced interest rates to record lows and also unveiled new stimulus measures.

After hovering around a four-month low, gold gained 1% in intraday trade on Thursday after the European Central Bank reduced interest rates to record lows and also unveiled new stimulus measures.

Spot gold hit $1,256.50 an ounce before easing a bit to $1,252.15 an ounce at 1308 GMT, still up 0.8%. Earlier in the session, the metal dropped to as low as $1,240.90 an ounce, close to the four-month low of $1,240.61. In Delhi, however, gold prices dropped by R60 to R27,180 per 10 gm.

A loose monetary policy in the developed world usually stokes inflation concerns and enhances the appeal of gold.

Jewellers said consumers in India have deferred large-scale purchases anticipating the prices to drop further, as they expect authorities to reduce a 10% import duty on gold as well as import restrictions that mandate at least one-fifth of gold purchased from abroad must be kept aside for exports after value addition.

However, the jewellers said Indian demand would rise once prices stabilise, as premiums have already crashed after the Reserve Bank of India last month allowed more entities to import gold and permitted gold loans. Any more easing measures would drive down prices further and boost the appeal of gold, even though an absence of festivals has also kept a lid on purchases now, they added. After the latest move by RBI, jewellers had said gold demand could rise 5-7% in 2014, compared with 975 tonne last year.

Copper drops further

Copper declined further in intraday trade on Thursday from a three-week low hit in the last session, thanks to uncertainties surrounding a probe into metal financing at China’s third-largest port, Qingdao, said metal analysts.

Standard Chartered has suspended new metal financing to some customers in China, according to Reuters. Other global trading houses and banks were also scrambling to check on their exposure to the probe as concerns grow that a crackdown into commodity financing could hit trade in the world’s top metals buyer, it added. Three-month LME copper fell 0.2% to $6,772 a tonne, having lost 1.2% on Wednesday to $6,760 a tonne, its lowest in three weeks.

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First published on: 06-06-2014 at 01:29 IST
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