Gold prices in India remained weak today, tracking a similar global move. According to On MCX, prices of December futures gold contracts were down 0.40% to ₹37,746 per 10 gram. According to MCX website, this was the fifth day of decline in gold prices, down from about ₹500 per 10 gram during the period. Silver prices also edged lower today. On MCX, silver prices fell 0.80% to ₹44,135 per kg. In global markets, gold prices slipped to one-week low today amid some positive developments towards an interim trade deal between the US and China.
This lifted the risk appetite, pushing Asian equities higher. Spot gold prices fell 0.1% to $1,461.02 per ounce while silver shed 0.3% to $16.95 per ounce.
Over the weekend, US national security adviser Robert O Brien said that a phase 1 trade agreement with China is still possible by the end of the year but the Trump administration would not turn a blind eye to what happens in Hong Kong.
Also improving the risk appetite, a survey of purchasing managers showed showed US manufacturing output accelerated in November to its fastest pace in seven months and services activity also picked up more than expected.
Meanwhile, pro-democracy candidates in Hong Kong have romped to a symbolic majority in district council elections.
Retail demand of gold remained lacklustre in India last week despite the price drop over past two months. Analysts attribute the surge in prices this year for weak demand. So far this year gold prices are up about 20% in India.
Dealers in India were offering a discount of up to $3 an ounce over official domestic gold prices last week, compared to a premium of $1.5 an ounce the previous week, Reuters reported. The domestic price includes a 12.5% import tax and 3% GST. India’s gold imports in October fell a third from a year earlier, dropping for a fourth straight month.
Abhishek Bansal, chairman of ABans Group of companies, said that gold prices have dropped as markets remain ‘cautiously optimistic’ about US-China reaching the Phase 1 deal.
Also weighing on gold prices is a likely pause in rate cuts by the US Federal Reserve, he added. The Fed has cut interest rates thrice this year but its last policy statement signalled a pause. The minutes of Fed’s last policy meeting failed to provide more hints on the next change, says Mr Bansal.
The dollar was steady today against a basket of currencies, after gaining 0.3% last week.
Gold traders will be closely following Fed Chair Jerome Powell speech scheduled later today. Lower interest rates help boost the appeal of non-interest yielding asset classes like gold.