Gold extends losses; falls on stimulus concerns, strong dollar

Gold prices extended losses, falling for the second day on Wednesday at the domestic markets in the midst of concerns that global central banks may refrain from further monetary easing to bolster growth, dimming the appeal of the bullion, which is a hedge against the inflationary risk of monetary stimulus. Gold futures for August 2013 contract, at MCX, were trading at Rs. 27,830 per 10 grams, down by 0.22 per cent after opening at Rs. 27,863 against the previous closing price of Rs. 27,892. It touched the intra-day low of Rs. 27,722 till the trading. Moreover, stronger greenback makes the gold expensive for those holding other currencies, thus reducing demand. 

The U.S. dollar index, a measure of the value of the United States dollar relative to a basket of foreign currencies, was trading 0.18 per cent higher at 81.259 on the Inter-Continental Exchange (ICE) .Prices also fell due to a holiday in China that deprived the metal of a strong support base. At the Commodity Exchange (COMEX), gold future for August 2013 delivery traded at US$1,373.9 per ounce, down by 0.23 per cent. It opened at US$1,377.7 against the previous closing price of US$1,377.