Gold prices fell sharply in Indian markets today while silver rates edged higher. On MCX, April gold futures fell 0.6% to 40,500 per 10 gram, after seeing a nearly 500 slide in the previous session. Silver prices however edged higher today after seeing a big loss in the previous session. Silver futures on MCX rose 0.4% to 46,075 per kg today after slumping nearly 1,100 in the previous session. China's central bank has flooded the economy with cash while trimming some key lending rates to support the economy hit by the spreading coronavirus, which has killed over 400 people.

A stronger dollar also held back gold prices, SMC Global said in a note.

In global markets, gold prices eased today as the US dollar held firm against a basket of currencies after a key US manufacturing survey showed a surprise rebound. But concerns about the widening coronavirus outbreak in China and its economic fallout provided some support to the metal. Spot gold was unchanged at $1,575.67 per ounce, after hitting its highest since January 8 at $1,591.46 in the previous session.

"The increasing fears about the fast spreading virus outbreak in China and its possible economic impact will continue to support gold’s safe haven demand. However, upbeat US economic releases and a stable dollar are likely to limit major gains," said Hareesh V, head of commodity research at Geojit Financial Services.

In terms of technicals, "if gold prices stay above $1560, we can expect a continuation of the momentum towards $1592 initially followed by $1610 levels. However, an unexpected drop below $1554 could weaken the sentiments," he added.

Hong Kong today reported its first death from the coronavirus, the second fatality outside mainland China from an outbreak that has killed 425 people.

Abhishek Bansal, chairman and MD of Abans Group of Companies, said that liquidity infusion by China's central bank is negative for gold as the risk premium dropped from the markets. Gold is considered a safe store of value during economic and political uncertainty.

Meanwhile, Asian stocks edged higher today as investors awaited further stimulus to boost China's economy due to the onslaught of coronavirus over the past few days.

Back in India, gold prices had hit a record high of 41,293 last month, dampening the demand. The recent slide has made some jewellers hopeful of a turnaround in demand amid the ongoing wedding season. Gold prices in India include 12.5% import duty and 3% GST. (With Agency Inputs)

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