Gold futures on Tuesday slipped below Rs 51,000 per 10 gram, tracking a muted trend in international spot prices as the US dollar strengthened.
October gold contracts were trading lower by 0.43% at Rs 50,843 per 10 gram at 9:20am on the Multi Commodity Exchange (MCX). Silver futures also fell 0.6% to Rs 67,850 per kg.
Gold futures had risen 0.7% in the previous session, snapping a three-day losing trend, and silver futures had surged 1.6%. Gold is down over Rs 5,000 per 10 gram from August highs while silver is at about Rs 10,000 per 10 gram lower.
Globally, gold prices also slipped on Tuesday, dragged by a stronger US dollar, but the safe-haven metal’s decline was limited by growing fears over the global economic recovery from the coronavirus crisis. Spot gold was down 0.2% at $1,925.09 per ounce by 0320 GMT. US gold futures fell 0.2% to $1,931.20.
“Over the past 24 hours, we have seen a stronger US dollar that is something that has weighed a little bit on gold. The $1,900 level in very important for gold right now here,” DailyFx currency strategist Ilya Spivak said, according to Reuters.
The dollar index rose against its rivals, making gold more expensive for holders of other currencies.
After data showed that Japan’s economy shrank more than initially estimated in the second quarter as capital expenditure took a hit from the pandemic, hopes around swift economic recovery faded.
Governments and major central banks have flooded the markets with unprecedented stimulus measures to mitigate economic damage from the virus, driving gold to new highs because of its role as a hedge against inflation and currency debasement.
Market participants’ focus will now be on the European Central Bank’s policy decision on Thursday to see if policymakers add yet more stimulus.
On the trade front, US president Donald Trump on Monday again raised the idea of decoupling the US economy from China, suggesting the United States would not lose money if the world’s two biggest economies no longer did business.
Spot gold is poised to break a support at $1,923 per ounce and fall into $1,880-$1,906 range, said Reuters technical analyst Wang Tao.
Elsewhere, silver fell 0.8% to $26.78 per ounce and platinum eased 0.1% to $906.74, while palladium edged 0.1% higher to $2,296.80.
(With agency inputs)