Gold falls to 6-month low on signs of economic recovery

NEW DELHI: Gold fell to a six-month low on Wednesday, breaking through support at $1,600 an ounce, as investors were drawn to riskier assets ahead of a closely watched US Fed minutes later in the day.

Signs of an improving global economic outlook sent equities to multi-year highs this week, making gold’s safehaven qualities less appealing. Spot gold fell as low as $1,590.71 an ounce, it’s lowest since August 15.

US gold futures for April delivery were down 0.7% at $1,592.60. Euro-denominated gold fell as low as 1,189.86 euros an ounce. Domestic demand of gold edged higher after prices fell near their lowest level in more than six months.

The most active gold contract for April delivery on the Multi Commodity Exchange (MCX) was 0.95% lower at Rs 29,766 per 10 gm. Futures hit a six-month low of Rs 29,794 on January 31.Silver contract for March delivery also weakened by 1.13% to Rs 54,549 per kg owing to decreased off take by industrial units. Indian gold prices are generally determined by international prices.

During festival seasons, local demand and currency movement also influence the prices to some extent. The Indian rupee gained its most in two weeks on Wednesday, largely aided by inflows related to a debt auction, with volumes remaining low as most state-run banks were thinly staffed due to a strike.

The partially convertible rupee closed at 54.075/085 per dollar versus its previous close of 54.185/195, a second session of gain. Brent crude fell toward $117 a barrel on Wednesday on the prospect of more Saudi oil supply.

The world’s top exporter of crude oil, Saudi Arabia, expects to raise its output in the second quarter to satisfy higher demand from China and drive economic recovery elsewhere, oil industry sources said, but the exact rise in volume was unclear. April Brent crude futures fell 19 cents to $117.32 a barrel by 0340 GMT after posting their first gain in four sessions on Tuesday. US crude for March inched up 8 cents to $96.74. The con