Gold futures closed lower in the domestic market on Tuesday as the dollar continued to flex its muscle against leading rivals, the pound in particular, cutting demand for commodities priced in the U.S. currency.
The prospect for higher U.S. interest rates is typically a negative for gold, which is snubbed in favor of asset classes that offer a yield that precious metals don’t. What’s more, higher interest rates can boost the dollar and dull demand for dollar-denominated commodities, including gold. That means gold and the dollar often move inversely.
At the MCX, gold futures for October 2016 contract ended at Rs 30,149 per 10 grams, down by 1.41 per cent, after opening at Rs 30,645, against a previous close of Rs 30,579. It touched the intra-day low of Rs 29,885.