Commodity Tips: Gold advances after Fed signals gradual pace of tightening

Commodity Tips : Gold futures rallied in the domestic and overseas market on Thursday as investors and speculators booked fresh positions in the precious metal as minutes from the US Federal Reserve’s latest policy meet, released late on Wednesday warranted a gradual pace of interest rate hikes in the world’s biggest economy, bolstering the outlook for the bullion as a store of value.

A gradual pace of tightening will benefit gold, which loses sheen as interest rates rise.

The minutes also reaffirmed the Fed’s faith in the US economy with most policymakers indicating that economic conditions for a maiden interest rate hike since 2006 will be met by the Federal upcoming meet in December. The Fed will meet next on December 16-17.

Slow and steady pace of rate hikes would enable traders and consumers to respond to them and accordingly adjust to them. A surge in United state payrolls in October and robust consumer spending has bolstered the case for a rate lift-off.

Gold may extend gains today after Fed Vice Chairman Stanley Fisher said that policymakers have done everything they could to prepare markets for a first rate hike in almost a decade.

At the MCX, Gold futures for December 2015 contract closed at Rs 25,291 per 10 gram, up by 0.79 per cent after opening at Rs 25,186, against the previous closing price of Rs 25,094. It touched the intra-day high of Rs 25,443.