Gold prices today suffer big fall, silver rates slump1 min read . Updated: 03 Feb 2020, 05:32 PM IST
- High prices have hurt gold demand in India
- Domestic price of gold includes a 3% GST and 12.5% import tax
Gold and silver prices fell sharply today in Indian markets, tracking a decline in global rates. On MCX, April gold futures were down 0.9% to ₹40,839 per 10 gram. On Saturday, in the special Budget day session, gold prices had jumped as much as ₹41,250 at day's high, approaching record high of ₹41,293 hit last month. Silver prices saw a sharper fall today. On MCX, March futures fell 1.6% to ₹46,357 per kg.
In global markets, gold fell nearly 1% to $1,577.38, reversing early gains it touched four-week high of $1,591.46, as China's central bank cut reverse repo rates and injected liquidity into markets to help support an economy hit by a coronavirus outbreak.
Chinese authorities pledged to use various monetary policy tools to ensure liquidity remains reasonably ample amid the virus outbreak in Wuhan.
Last week, the World Health Organization declared the coronavirus outbreak a public health emergency of international concern but stopped short of recommending trade and travel restrictions on China. Many global airlines have suspended or scaled back direct flights to China's major cities.
China's central bank said it will inject 1.2 trillion yuan ($173.81 billion) worth of liquidity into the markets after promising to provide monetary and credit support to companies struggling due to the virus.
Meanwhile the death toll from the outbreak has crossed 350 and the number of infected above 17,000 with first death reported from outside China, in Philippines.
Analysts have warned the outbreak could slash global growth this year, throwing a spanner in the works just as economies were showing signs of stabilising after more than a year of slowing.
Holdings of the world's largest gold-backed exchange-traded fund, SPDR Gold Trust fell 0.03% to 903.21 tonnes on Friday.
Back in India, high prices and a weak economy have taken a toll on gold demand. According to a Reuters report, gold dealers last week offered discounts of up to $13 an ounce over official domestic prices, up from $11 in the previous week. Domestic price includes a 3% GST and 12.5% import tax.
In Budget 2020 proposals, Finance Minister Nirmala Sitharaman on Saturday proposed setting up of an international bullion exchange at IFSC in GIFT City for better price discovery of gold and enhancing India’s position in such market. The International Financial Services Centre (IFSC) is located in GIFT City near Ahmedabad. (With Agency Inputs)