Mumbai [India], Dec.16 (ANI-Businesswire India): Mr. Prithviraj Kothari, Managing Director of Riddi Siddhi Bullions Ltd. (RSBL) is of the view that the decision by the United States Federal Bank to raise interest rates has impacted the price of gold.
He said that the U.S. Fed happened to deliver something that was unpredictable and which has not been the trend over the course of the year.
He said that the US FOMC has raised the federal funds rate by 25 bps to 0.50 percent - 0.75 percent overnight, the only increase in this year and only the second in a decade.
More importantly, modestly hawkish Yellen called for a further three interest rate increases during 2017.
Mr. Kothari further stated that double impact left Gold Bulls wanting for shelter as the safe haven metal fell below USD 1,140 testing USD 1,135 on the way. ETF's further 700k ounces of outflows made a strong bearish impact.
He also said that the continual strengthening of the U.S. dollar was another factor responsible for the fall in the prices of gold.
"From here on, gold has been gripped under the bear strength and with the U.S. economic projections improving, it is tough for gold prices to sustain higher levels. Until there isn't a major financial catastrophic or a fiscal stimulus (can't rule that out with the new US administration) or a geo-political tension, metals would remain pressured," he said.
Support from here on is USD 1,120 and USD 1,070 and in INR 26,500 to INR 25,000. But these low levels could attract some fresh regional specific physical buying too. With gold monetization drive, it won't be so easy for the Indian physical buying to support the prices here on even when Indians are entering the wedding season. (ANI-Businesswire India)