Gold price and silver prices in India today fell after rising sharply on Monday. On MCX, gold October futures fell 0.24% to ₹38,088 per 10 gram. They had gained 1.7% on Monday. Tracking a similar trend, silver prices on MCX fell 0.40% to ₹47,040, after a 3% rise on Monday.
A similar trend was also witnessed in global markets. Inglobal markets, gold was today trading flat at $1,498.13 an ounce after a sharpjump on Monday. Gold and silver prices had jumped sharply on Monday as theweekend attack on Saudi oil facilities increased Middle East tensions andpushed investors toward safe-haven assets.
In the spot market, prices of 24 karat gold declined by ₹150 to ₹38,905 per 10 gram in Delhi while silver fell ₹290 to ₹48,028 per kilogram, Press Trust of India reported, citing HDFC Securities.
Gold is often used as a safe store of value during timesof political and financial uncertainty. Investors returned for safe-havenassets like gold after weekend attacks on Saudi Arabia's oil facilitiesincreased tensions in the Middle East, Yes Securities said in a note. A fall inrupee's value against the US dollar has also increased the imported cost ofgold.
Gold traders are awaiting policy decisions from the USFederal Reserve and Bank of Japan, both due on Wednesday. Lower US interestrates put pressure on bond yields and the dollar, increasing the appeal ofnon-interest yielding gold.
A jump in oil prices is negative for emerging markets such as India, which is the world's third-biggest importer of oil.
The rupee fell 68 paise to 71.60 against the US dollar onMonday amid concerns that higher crude prices following drone attacks on SaudiArabia's oil facilities could put pressure on India's current account andfiscal deficit. The rupee slid to 71.86 against the US dollar today in earlytrade, extending recent losses.
"Supporting gold price is concerned about the health of major economies amid disappointing economic data and increased geopolitical tensions following attacks on oil facilities in Saudi Arabia. A sharp spike in crude oil price has also boosted inflationary concerns however it may materialize only if we see a prolonged supply disruption," Kotak Securities said in a note.
High gold prices, which are up over 20% in India so far this year, has hurt domestic jewelry demand. Jewelers have also reported a higher supply of old gold jewelry. However, they hope that the upcoming festive season will help lift jewelry demand.
