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MTECHTIPS:-Gold Spurts, MCX Futures Break Above Rs 27 K

MTECHTIPS:-Gold Spurts, MCX Futures Break Above Rs 27 K

Global stocks got hammered today following a 2% slide in the DOW and boosted gold further. Gold extended gains today as further evidence in favor of a tepid economic grow thin the US. An increase in US interest rates can lower real house prices, but such areduction could lead to a marked decline in real gross domestic product and inflation, atop US Federal Reserve official warned on Thursday. Monetary policy actions have sizable-and significant effects on house prices in advanced economies. That is, an increase in interest rates tends to lower real (inflation-adjusted) house prices, San Francisco Fed President John Williams said in a speech. In a key data, the number of people who appliedfor US unemployment benefits in mid-August rose for the fourth straight week, but in itialclaims remain at very low levels that indicate the labor market is still improving. New jobless claims rose by 4,000 to a seasonally adjusted 277,000 for week ending August 15.The average of new claims over the past month rose by 5,500 to seasonally adjusted 271,500. These two news items corroborated with a slightly downbeat undertone in the latest US FOMC minutes which boosted gold sharply. Dollar weakened slightly and traders increased-their bullish stakes in COMEX Gold, making the metal extend its rally above $1100 pounce as the FOMC July meeting minutes noted that the staff’s forecast for inflation was revised down, particularly in the near term, as the decline in crude oil prices over the in ter meeting period was expected to result in lower consumer energy price. This took gold up as it indicated that the FOMC might want to see a more clear evidence that pricesare edging up before initiating the much anticipated rate hike. Gold has continued to jump today as well, rallying near a fresh six month high above $1160 per ounce amid heavy losses in global stocks. The metal is rising despite drop in crude and copper and tepid moves in equities, indicating that a bottom might have formed around its five year low mark. The counter is quoting at $1162 per ounce, up 0.76% on the day. MCX Gold futures for October are trading at Rs 27190 per 10 grams, up 1.27% on the day.

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