NEW DELHI: Gold prices on Tuesday plunged ₹600 to ₹34,870 per 10 gram in bullion market here, tracking weak global trends amid a strong dollar and easing demand from local jewellers.
Globally, spot gold was trading lower at USD 1,394.39 an ounce, while silver was down at USD 15.08 per ounce in New York.
Here are a few reasons for gold losing some of its sheen on Tuesday:
*Fed Chairman Jerome Powell's two-day testimony before Congress starts on Wednesday, where investors will look for further cues on the central bank's stance on monetary easing. Expectations that the US Federal Reserve will soon cut interest rates was one of the reasons behind gold's recent spike to a six-year highs. However, strong gains in US employment data have cast doubt on Fed's rate cut expectation
"If Powell confirms a dovish view, we will see some renewed dollar weakness and support for gold; bond yields will also find some support. If not so dovish, and that is the current fear in the market, then we could see some additional long liquidation," Saxo Bank analyst Ole Hansen added.
*Weak demand expectation from the world's second top consumer, India, due to a hike in duty also weighed down the sentiments. However, feeble global equities restricted major downside in the counter," Hareesh V, Head Commodity Research, Geojit Financial Services said.
*Last week, in the Union Budget for 2019-20, the government proposed to increase customs duty on gold and other precious metals to 12.5 per cent from current 10 per cent.
According to the All India Sarafa Association, gold of 99.9 per cent and 99.5 per cent purity plummeted ₹600 each to ₹34,870 per 10 gram and ₹34,700 per 10 gram, respectively, in the national capital.
Sovereign gold, however, held steady at ₹27,300 per eight gram.
Meanwhile, silver ready declined by ₹48 to ₹38,900 per kg and weekly-based delivery slumped ₹93 to ₹38,000 per kg due to reduced offtake by industrial units.
Prices of silver coins held flat at ₹81,000 for buying and ₹82,000 for selling of 100 pieces.