Gold remained under pressure in the Asia electronic trades today weighed down by strength in the US dollar after the U.S. Federal Reserve indicated that the central bank could start tapering stimulus efforts in the coming months.
Gold futures for delivery in June lost $1, or 0.1%, to sell for $1,366.40 an ounce in electronic trade during Asian hours. The metal ended down $10.20, or 0.6%, at $1,370.10 an ounce, after Federal Reserve Chairman Ben Bernanke, during his time before a congressional committee, said the bank may wind down the pace of bond purchases in the “next few meetings,” though the decision would depend on economic data.
Earlier Wednesday, gold jumped to more than $1,400 after Bernanke said premature tightening of Fed policy “would also carry a substantial risk of slowing or ending the economic recovery and causing inflation to fall further.”
The dollar rallied after Bernanke’s statement, making gold and other dollar-denominated commodities more expensive for holders of other currencies to buy. The ICE dollar index, a gauge of the greenback’s movement against six other major currencies, built on Wednesday’s gains by rising to 84.477 from 84.251.
On the economic front today, China's manufacturing activity was contracting in May, according to preliminary data released Thursday, as HSBC's "flash" Purchasing Managers' Index fell to a seven-month low of 49.6 from April's final reading of 50.4. A result below 50 signals contraction.
MCX June bullion futures may open above Rs 26000 with resistance near Rs 26050-90 levels and support near Rs 25900 levels.