Many analysts suggest buy-on-dips strategy for gold on expectations that the precious metal may benefit from safe-haven buying amid increasing challenges to global economy
Gold prices in India are now down about ₹6,000 from their August highs
Gold and silver prices in India edged lower in tandem with a fall in global rates. On MCX, December gold futures slipped 0.14% to ₹50426 per 10 gram while silver edged 0.06% lower to ₹60100 per kg. Both the precious metals had slumped in the previous session. In the previous session, gold prices on MCX had declined 0.9% or ₹450 per 10 gram while silver had crashed ₹2080 or 3.3% per kg.
In global markets, gold prices were flat today after a big fall in the previous session. Spot gold was little changed at $1,877.83 per ounce, after falling as much as 2% in the previous session. Among other precious metals, silver rose 0.1% to $23.43 per ounce, while platinum dipped 0.1% to $866.96.
The US dollar index was higher against a basket of six major currencies, as fears of the economic impact from a fresh wave of the novel coronavirus in Europe kept the dollar firm.
Precious metals have slipped lower on firm dollar and uncertainty over the progress in US fiscal package talks, Geojit Financial said in a note.
Gold prices had already been under pressure as US lawmakers have failed so far to pass a new stimulus. France's President Emmanuel Macron's decision to shut down the country for a month hit the sentiment in financial markets while Germany said it would impose drastic new curbs as experts warned hospitals would soon be overwhelmed.
The moves followed weeks of exponentially rising new infections across Europe that have forced governments across the continent to put containment measures in place.
Gold ETF investors continued to remain on the sidelines. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund or gold ETF, fell 0.67% to 1,258.25 tonnes on Wednesday.
Also on the gold investors' radar will be the outcome of European Central Bank meeting, due later today.
Despite surging cases across Europe, the European Central Bank is expected to resist pressure to unveil new stimulus measures, but will likely pave the way for action in December.
"Gold may continue to witness choppy trade as US dollar and equity markets may remain volatile as market players position for US elections. We however maintain buy on dips view on expectations that gold may benefit from safe haven buying amid increasing challenges to global economy," Kotak Securities said in a note.
On silver, the brokerage said: "The while metal may remain directionless along with gold and industrial metals as more clarity is awaited on US stimulus as well as economic impact of virus related restrictions. We however expect gold to benefit from safe haven buying and this may support silver as well."
(With Agency Inputs)
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