Gold prices today fell sharply in India, mirroring a big decline in global prices. On MCX, gold futures for August delivery fell below the ₹34,000 per 10 gram, when they declined 1.2% to ₹33,810. The October gold contracts on MCX also fell sharply but managed to hold on to ₹34,000 level. October gold futures contracts were down 1.2% at RS 34,026.
The latest trigger for the sharp decline in gold prices: Over the weekend, US and China agreed to a truce in their trade war, denting the safe-haven appeal of the yellow metal.
Investors are now focused on US jobs data due this Friday for clues on the Federal Reserve’s next move on policy.
Asian stocks markets, including Indian equities, rallied today amid a thaw in the China-US trade dispute averted one threat to the global economy, After his meeting with Chinese leader, Donald Trump said he would hold off imposing additional tariffs on Chinese imports and delay restrictions against Huawei Technologies Co., letting U.S. companies resume sales to China’s largest telecommunications equipment maker.
Analysts still bet on global central banks maintaining their bias towards more accommodative policy, thus supporting the gold price.
“We’re quite positive toward gold, we think this abatement in the U.S. dollar strength and potential rate cuts in the near term will certainly continue to boost investment demand,” said ANZ group analyst Daniel Hynes.
Michael Taylor, managing director of Moody’s Investors Service, said: “Although the US-China agreement will likely partially relieve recent negative sentiment in the financial markets and support near-term growth, it stops short of removing existing tariffs. However, we expect China will continue to ease policy in an effort to offset the impact of the existing tariffs and that major central banks will maintain their bias towards the more accommodative policy.”