Gold Off Two-Month Highs Ahead Of Fed Minutes

MCX Gold futures are on a firm foot today, aided by a dismal undertone in Indian Rupee even as the global prices moderated. The COMEX Gold futures tested lows near $1360 per ounce as investors waited for the FOMC minutes to be released in evening. However, bargain buying supported the commodity as investors eyed good demand from India and China. The metal is quoting at $1365.90, down $6.70 per ounce on the day. Prices had hit a two-month high of $1384 per ounce on Monday.

China may overtake India as the world's biggest gold consumer in 2013 as the dragon country has more favourable policy on the precious metal as compared to the economy here, the WGC said last week. Gold consumption in China rose to 570 tonnes in the first half of the current calendar year, slightly higher than 566.5 tonnes in India, the data showed. Consumers in these two countries expect gold prices to be stable or higher in the future, it said.

According to the latest WGC report, the gold consumption in China during the April-June period of this year confirms that the gold investment demand in China remains strong. The poorly performing stock market in that country is not an attractive alternative investment and gold investment products are increasingly available and easily accessible to a captive domestic audience. In China, continued expansion of the domestic jewellery retail network and growth in production capacity has positive longer-term implications for jewellery demand.

Indian Rupee fell near 64.60 per US dollar levels as the local stock markets witnessed a massive intraday sell off and dropped nearly 2% on a closing basis to end at an 11 month low. MCX Gold futures are trading at Rs 31209, up Rs 397 or 1.29% on the day with 4.30% increase in the open interest. Prices had dropped near Rs 30600 per 10 grams earlier.