Gold futures closed higher in the domestic market on Tuesday as a fall in the U.S. service-sector index to its weakest level in over six years appeared to diminish the likelihood of a U.S. interest-rate hike this month, fueling a drop in the dollar. The debate over the speed and aggressiveness of Fed interest-rate changes has been pinned to each economic release but the payrolls report carried additional weight for financial markets. Prospects for higher interest rates can boost the dollar and dull the appeal of greenback-priced gold.
Rising rates also can turn off investors from precious metals, which don’t bear a yield. At the MCX, Gold futures for October 2016 contract closed at Rs 31,372, per 10 gram, up by 1.25 per cent after opening at Rs 30,995, against the previous closing price of Rs 30,985. It touched the intra-day high of Rs 31,410.
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