Gold prices and silver prices dropped in Indian markets amid a strong rally in equity markets. On MCX, gold futures edged 0.15% lower to ₹49,879 per 10 gram, after rising to ₹50,175 earlier in the session. Silver futures fell 0.6% to ₹65,057 per kg. In the previous session, gold futures had jumped 1.5% or ₹750 per 10 gram while silver had surged 2.5% or ₹1,600 per kg.
In international markets, gold rates were flat today after witnessing a big jump in the previous session, as investors monitored the prospects for additional US stimulus spending. Spot gold was little changed at $1,863.30 per ounce after clocking 1.7% jump in the previous session.
Gold traders are looking at progress in US stimulus talks. Senator John Thune of South Dakota, the No. 2 Republican leader, said it’s possible a pandemic relief bill could move this week on the stop-gap measure or later on the broader spending package. In Japan, Prime Minister Yoshihide Suga unveiled around $380 billion in fiscal measures to help the economy recover from the pandemic.
Gold rates have rebounded from its recent lows of below of below $1,800 in global markets, gaining support from weaker US dollar, rising virus cases and virus related restrictions, mixed economic data from major economies, hopes of additional stimulus measures and Brexit uncertainty, says Kotak Securities in a note. However, weighing on price was continuing ETF outflows, strength in equity markets and optimism about COVID-19 vaccine, the brokerage added.
Despite the recent correction, gold, which is seen as a hedge against inflation that could result from large stimulus, is still up about 25% so far this year amid unprecedented stimulus announced by central banks and governments across the world.
Among other precious metals, silver was steady at $24.51 per ounce and palladium was little changed at $2,330.71.
Meanwhile, British and EU leaders will meet face-to-face to try to seal a post-Brexit trade deal after failing break the deadlocked negotiations.
The biggest factor which has pressurized gold price over the past few weeks has been progress on vaccine front, say analysts. A vaccine for COVID-19 may help bring the outbreak under control and help government lift restrictions boosting economic activity and reducing need for stimulus hence it is negative for gold, they say.
Britain is scheduled to start rolling out the COVID-19 vaccine developed by Pfizer and BioNTech from today.
On gold traders radar will be two important events scheduled on Thursday: The European Central Bank policy decision and US Food and Drug Administration meet to discuss the covid vaccine made by Pfizer/BioNTech.
ETF investors preferred to remain on the sidelines. The holdings of SPDR Gold Trust, the world’s largest gold-backed exchange-traded fund, fell 0.25% to 1,179.78 tonnes on Monday from 1,182.70 tonnes on Friday.