Gold prices in India extended losses to the fourth day in a row amid mixed global cues. On MCX, June futures were down 0.23% to ₹45,520 per 10 gram, extending the previous session's 0.30% drop. Silver futures on MCX also fell today, declining 0.4% to ₹42,870 per kg. The rupee was higher against the US dollar, weighing on domestic gold prices, which include 3% GST and 12.5% import duty. India imports most of its gold requirements.
Risk sentiment improved after Prime Minister Narendra Modi on Tuesday said the government will spend a total of ₹20 trillion to help the economy weather the fallout from the coronavirus pandemic. Domestic equity markets were sharply higher in pre-open trade.
Jigar Trivedi, research analyst at Anand Rathi Shares, said: "Gold opened in red due to strength in rupee. However comes gold was still flat to positive on expectations of more stimulus from the U.S. Federal Reserve to support an economy battered by coronavirus-induced restrictions, while an easing dollar lent further support. Having said that, we believe the undertone is still positive so its buy on dips market."
In global markets, gold prices rose today on expectations of more stimulus from central banks to support economies battered by coronavirus lockdowns. Spot gold rates rose 0.3% to $1,701.44 per ounce.
Growing fears of a second wave of infections also supported gold as the Chinese city of Wuhan, where the pandemic originated, reported new cases since its lockdown was lifted.
Overnight, US stocks fell after Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases, told Congress the virus was not yet under control and that there would not likely be a treatment or vaccine in place by late August or early September.
Gold has risen over 12% so far this year amid unprecedented stimulus announced by global central banks. Widespread stimulus measures benefits gold because it is considered a hedge against inflation.
Gold traders will look for clues on Federal Reserve stance as chairman Jerome Powell will later in the day be speaking on current economic issues in a webcast hosted by the Peterson Institute for International Economics.
US President Donald Trump on Tuesday again pushed the Federal Reserve to adopt negative interest rates. (With Agency Inputs)