Home > Markets > Commodities > Gold prices fall today after sharp rise, silver edges higher

Reversing early gains, gold prices in India edged lower today. On MCX gold futures today fell 0.20% to 38,310, after rising to 38,574 at day's high. Gold had gained 268 on Tuesday. Silver futures on MCX gave up some gains but still traded 0.15% higher at 45,943. However, in spot markets, gold prices rose 315 to 39,325 per 10 grams in Delhi market, Press Trust of India reported. Silver was trading up by 1,010 to 47,330 per kg.

In global markets, spot gold rose 0.1% to $1,505.95 per ounce. US visa restrictions on Chinese officials and addition of more Chinese companies to a US trade blacklist ahead of trade talks weighed on hopes that the two countries could resolve the trade spat.

In global markets, gold prices have risen 17% as weak global growth, US-China trade spat and easing of monetary policy by central banks have increased the safe-haven appeal of gold. Rising inflows into bullion-backed ETFs has also supported the price. Holding of gold-backed ETFs are now just less than 35 tons away from a record set in 2012, Bloomberg reported.

Gold is a beneficiary of lower interest rates and when investors shun risk.

Federal Reserve Chairman Jerome Powell hinted on Tuesday at the possibility of another interest rate cut after a report showed the growth in the vast US services sector is slowing. Data released earlier this week showed an US factory activity contracting to its lowest level in more than a decade.

Kristalina Georgieva, the new IMF chief, on Tuesday warned that the global economy is experiencing a "synchronized slowdown and said that it could worsen if governments failed to resolve trade conflicts and support growth.

The Citigroup has stuck to its forecast of gold rallying to $1,700 an ounce over six to 12 months, saying that slowdown in global trade is starting to bite the U.S. economy.

"Gold may continue to trade in a range near $1500/oz unless we get more clarity on US-China trade talks and Fed’s monetary policy however the general bias may be on the upside owing to global growth concerns and geopolitical issues," Kotak Securities said in a note.

In India, apart from the rupee-dollar exchange rate, the domestic price also includes a 12.5% import tax and 3% GST. The increase in domestic prices from last week's lows of 36,800 has sparked fears that demand could be hit this this Dhanteras.

The government has also launched gold bonds to coincide with the festive season. The 2019-20 Series V gold bonds, which is open for subscription, will close on October 11. Another tranche of gold bonds, 2019-20 Series VI, will open for subscription on October 21. (With Agency Inputs)

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