Gold prices today fall sharply, silver rates crash ₹2,500 in two days2 min read . Updated: 07 Oct 2020, 09:06 AM IST
- Global gold prices tumbled after US President Donald Trump abruptly ended talks on an economic aid package
- Gold tends to benefit from widespread stimulus measures
Gold prices in India fell for the second day, tracking a decline in global rates after US President Donald Trump suspended stimulus talks with Democrats. On MCX, December gold futures were down 0.9% to ₹50,088 per 10 gram while silver futures fell 1.5% to ₹59,658. In the previous session, gold prices had declined 0.32% per 10 gram amid a choppy trade while silver had tumbled ₹1,450 or 2.3% per kg.
In global markets, gold prices were muted, trading at one-week lows after US President Donald Trump abruptly ended talks with Democrats on an economic aid package. Spot gold was flat at $1,877.15 per ounce after falling 2% in the previous session.
A stronger dollar also hurt gold prices. The dollar index was up 0.2% against rivals. Among other precious metals, silver rose 0.7% to $23.25 per ounce, platinum was up 1% at $856.51, while palladium dipped 0.1% to $2,339.81.
"Rising coronavirus cases in Europe and persisting worries that Brexit transition period may end without a deal has also kept a floor to the US dollar. While gold benefitted from weaker US dollar, improved risk sentiment reduced its safe haven appeal," Kotak Securities said in a note.
In his first major policy pronouncement since leaving the hospital, Trump called off talks with Democratic lawmakers on coronavirus relief legislation until after the election, even as cases are on the rise across much of the country.
"I have instructed my representatives to stop negotiating until after the election when, immediately after I win, we will pass a major Stimulus Bill that focuses on hardworking Americans and Small Business," Trump wrote on Twitter. Trump made the move hours after Federal Reserve Chair Jerome Powell appealed for greater spending to avoid damaging the economic recovery.
Gold tends to benefit from widespread stimulus measures as it is widely viewed as a hedge against inflation and currency debasement.
ETF investors remained on the sidelines. Holdings in SPDR Gold Trust, the world's largest gold-backed exchange-traded fund or gold ETF, fell 0.32% to 1,271.52 tonnes on Tuesday.
Analysts expect gold to remain choppy depending on the movement in US dollar and general market risk sentiment. India's gold imports in September fell 59% from a year earlier to the lowest level in four months, Reuters reported, citing sources. India imports bulk of its gold requirement. Analysts hope that gold demand in India is likely to pick up ahead of the festive season, further supported by the recent correction in prices. (With Agency Inputs)