Gold prices in Indian markets fell for the second day in a row amid flat global rates. On MCX, August gold futures were down 0.05% to ₹47,316 per 10 gram, following a ₹250 decline in the previous session. Tracking gold, silver also edged lower, with futures on MCX falling 0.5% to ₹48,194 per kg. In the precious session, silver futures on MCX had ended moderately higher.
In global markets, gold remained flat amid concerns over the impact of rising coronavirus cases on global economy. Spot gold was flat at $1,726.69 per ounce. Among other precious metals, silver dropped 0.8% to $17.45, and platinum lost 0.7% to $813.26. Spiking coronavirus cases has dented investors sentiment towards riskier assets, say analysts.
“Caution prevails amid growing worries over resurgence of second wave of infections along with rise in geopolitical tensions. On domestic front, commodities may seek support from weakness in Indian rupee,” Kotak Securities said in a note. Rupee had hit a low of 76.3 against US dollar in the previous session, weighed down by rise in Indian-China tensions. Domestic gold prices include 12.5% import duty and 3% GST.
However, a rise in the US dollar has limited gold’s advance as it makes the precious metal costlier for holders of other currencies.
“Escalating global geopolitical tensions amid concerns of a second wave of virus continue to support gold’s safe haven appeal. Hopes of fresh economic stimulus measures also offered lower level support to prices,” said Hareesh V, head of commodity research at Geojit Financial Services.
The US economy is beginning to recover but it will need more help, Federal Reserve Chair Jerome Powell told lawmakers on Wednesday. The US central bank has pumped trillions of dollars of credit into the economy to cushion it from the fallout from the pandemic and earlier this week the Fed moved to launch corporate bond buying programme.
Gold tends to benefit from widespread stimulus measures from central banks because it is widely viewed as a hedge against inflation and currency debasement.