Gold price in Indian cities fell by close to 1 percent on Wednesday resulting in 10 grams of 22 carats to be priced at Rs 29,100 in Delhi in the morning hours.
Spot gold was at $1,277.78 an ounce, close to its one-year low as per a Reuters report. It fell by one percent on Tuesday.
PTI reported that the gold futures fell by Rs 29 to Rs 29,700 per 10 grams as participants cut down bets amid a weak global trend. At the Multi Commodity Exchange, gold prices for delivery in August declined by Rs 29, or 0.10 percent, to Rs 29,700 per 10 grams in a business turnover of 1,255 lots, it further said.
The US dollar's volatility and global geopolitical tensions have influenced the price of gold since the beginning of the year. The precious metal, that is considered as a safe haven at times of uncertainties, however, did not surprisingly gain from the trade war between the US and its allies when most global financial markets tumbled.
Gold prices are driven by the strength of the US dollar and currently, the American currency is standing stronger after the US Federal Reserve Chairman Jerome Powell's US economic outlook reinforced views the central bank is on track to steadily hike interest rates. When the US treasuries are stronger, it erodes the appeal of the yellow metal as a safe haven among investors and also makes it an expensive affair for buyers in currencies other than the dollar, reducing the demand.
There has also been a fall in demand for gold in China, the biggest consumer of gold in the world as its local currency was weakened against the American greenback, affected by the trade war.
The monetary policy statement to be released by the Reserve Bank of India on August 1 will also govern the Indian rupee's position against the dollar.