Gold prices in India today edged lower today amid weak demand from jewellers. Reversing early gains, on MCX, August gold contracts were down 0.11% to 34,735 per 10 gram. Earlier this month, they had hit a record high of 35,409. Tracking gold, silver contracts on MCX gave up most of their gains and were trading marginally higher at 41,155 per kg. In spot market, gold prices dropped 50 to 35,720 per 10 gram in Delhi, according to the All India Sarafa Association. Silver rates also fell by 100 to 41,900 per kg.

In India, record high prices have hurt demand, prompting dealers to offer discounts. The domestic price includes a 12.5% import tax and 3% GST. Earlier this month, the government raised import duties on gold and other precious metals to 12.5% from 10% earlier this month.

In global markets, spot gold was 0.4% higher at $1,423.49 per ounce, supported by low bond yields globally.

The US Federal Reserve is widely expected to trim its interest rate by at least 25 basis points at its July 30-31 monetary policy meeting. According to a Commerce Department report, US economic growth slowed less than expected in the second quarter, making the Fed less likely to cut rates by 50 basis points given the economic improvement. Analysts say that a 50-basis-point cut could give a further boost to gold prices that are up over 10% this year.

However, the downside in gold will remain limited as investors remain invested in the sector amid gloomy global outlook, Reliance Securities said in a recent note.

Market participants will be also watching the progress of US-China trade talks as negotiators from both countries meet later this week for their first in-person talks since a truce at G20 last month.

SPDR Gold Trust, the world's largest gold-backed exchange-traded fund, said its holdings fell 0.14% to 818.14 tonnes on Friday from 819.32 tonnes on Thursday.

Hedge funds and money managers reduced their bullish stance in COMEX gold in the week to July 23, the US Commodity Futures Trading Commission (CFTC) said in a report on Friday. (With Agency Inputs)

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