Gold prices in India today remained subdued after hitting new highs last week. On MCX, August gold futures were off 0.16% to 34,964 while October contracts also slipped 0.14% to 35,512. Tracking gold, September silver contracts on MCX also slipped 0.06% to 41,408 per kg. Earlier this week, spot gold prices in Delhi markets had earlier a record high of 35,970 per 10 gram.

In global markets, gold prices remained steady as escalating tensions in the Middle East drove investors towards the safe-haven metal. A stronger US dollar however capped the gains. Spot gold was up 0.3% at $1,420.65 per ounce.

The Pentagon said on Tuesday said that a US Navy ship took defensive action against a second Iranian drone in the Strait of Hormuz last week, but did not see the drone go into the water.

On the trade front, a report said US Trade Representative Robert Lighthizer would travel to Shanghai next week for meetings with Chinese officials to hammer out a deal to end the long-drawn trade tussle between the world's top two economies.

The dollar extended gains to a five-week high against a basket of global currencies, making gold expensive for holders of other currencies.

Gold traders will be closely watching the policy action of two major global central banks. The European Central Bank is expected to give its clearest signal yet of imminent policy easing this Thursday. ECB chief Mario Draghi last month flagged fresh easing to fight stubbornly low inflation.

The Federal Reserve is also widely expected to lower interest rate at its meeting ending July 31.

If the Fed surprises with a 50 bps cut, gold prices could get a further boost, say analysts. For now, gold may remain in a narrow range, they said. Among other precious metals, silver rose 0.3% to $16.45 per ounce. (With Agency Inputs)

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