Gold prices glittered again and hovered near an eight-month high on Thursday as demand for the safe-haven metal increased after a hawkish-than-feared Federal Reserve minutes. The simmering tensions on the Ukraine border also enhanced the investors' appetite for the yellow metal.
This week, MCX gold prices touched 13-month highs, breaching Rs 50,000 mark. Now it is trading slightly below that level because of the appreciation in rupee.
On the MCX, the gold April future contract was trading at Rs 49,600, a rise of 0.44 percent, at 8:20 am. "We are expecting it may test 49,900 to 50,000 and $1875 to $1880 today," said Anuj Gupta, VP Research at IIFL Securities.
The US Federal Reserves' dovish meeting minutes has led to a decline in dollar and the global yields, which has been supportive for gold.
Looking at daily inflation data that were coming in from various central banks pointed to multi-decade high inflation numbers that will continue to support prices for gold there.
"Gold may test $1,920 to $1,950 levels very soon. And on MCX it may test 51,000 to 52,000 levels in two months," he added.
* COMEX Spot gold held its ground at $1,868.36 per ounce, as of 0123 GMT. Bullion had hit its highest level since June at $1,879.48 on Tuesday.
* US gold futures were steady at $1,871.40.
* Oil and gold prices rose on Wednesday after NATO and the United States said Russia was increasing its troop build-up near Ukraine, while dovish Fed minutes helped stocks close mostly flat on Wall Street.
* Fed officials last month agreed that with inflation tightening its grip on the economy and employment strong, it was time to raise interest rates, but also that any decisions would depend on a meeting-by-meeting analysis of inflation and other data, according to the minutes of the Jan. 25-26 policy meeting.
* The dollar eased after the minutes suggested policymakers are not set on a particular pace of interest rate hikes, making gold more attractive to overseas buyers.
* A dip in US Treasury yields decreased the opportunity cost of holding non-interest-paying bullion.
* US retail sales increased by the most in 10 months in January, lifting the level of sales to a record high amid a surge in purchases of motor vehicles and other goods, but higher prices could limit the boost to economic growth this quarter.
* Among other precious metals, spot silver was flat at $23.54 per ounce and palladium rose 0.2% to $2,284.19.
* Platinum dipped 0.5% to $1,056.53, easing off a three-month high touched in the previous session.
-With agency inputs