Gold Slips Beneath $1260

Shanghai (Jan 30)  Gold futures slipped beneath $1260 an ounce in the Asia electronic trades today as The US dollar gained ground after falling yesterday when the US central bank said it would continue to scale back its bond-buying programme.

In the currencies, the greenback firmed to 102.40 yen, compared with 102.25 yen in New York Wednesday afternoon. The euro also inched up to 139.76 yen from 139.71 yen in US trade while it weakened to $1.3646 against $1.3662.

The Fed said Wednesday the US economy was growing firmly enough to further trim its colossal stimulus, which will shrink to $65 billion a month from February, spelling a steady tightening of global financial conditions.

Sharp interest rate hikes by Turkey and South Africa on Wednesday failed to stem heavy losses in their currencies. The Central Bank of Turkey said it was raising its main overnight lending rate to 12 per cent from 7.75 per cent and more than doubling its one-week rate to 10 per cent from 4.5 per cent.

South Africa’s central bank was raised its main interest rate by a half percentage point to 5.50 per cent despite concerns over growth. Other developing countries such as Brazil, Chile, Hungary, Indonesia and Thailand may be next to respond to their currency drops.

India’s central bank surprised the markets on Tuesday by raising its main interest rate by a quarter of a percentage point to 8 per cent.

COMEX February dated gold futures are trading down $5.7 at $ 1256.5 an ounce in the electronic hours today. The domestic gold futures were off nearly Rs 100 at Rs 29645 per 10 grams.