In the international market, gold prices on Tuesday morning have been hovering near a three-month high that it hit in a previous session on Monday. The decline has been over worries of a global economic slowdown amid trade tensions between the US and its allies and expectations of an interest rate cut by the Federal Reserve.
Spot gold slipped slightly by 0.2 percent to $1,322.27 per ounce, after touching its highest since 27 February at $1,327.90 in the previous session. US gold futures held steady at $1,328.20 an ounce.
Gold rates in India climbed on Tuesday to be priced at Rs 30,810 in Chennai, Rs 21,720 in Kolkata and Rs 31,460 in Mumbai as well as Delhi, per 10 grams of 22 carats.
Global factors do play a part in pricing of the precious metal sold by jewellers in India. The gain in the Indian rupee against the US Dollar on Tuesday morning might, however, help weaken the blow.
At present, the international scene appears tense and uncertainities loom on whether or not development will pick up across the world as US-China relations worsen. The tension between the two countries got another jolt when they clashed again at the Shangri-La Dialogue in Singapore on Sunday.
Further, the Washington's tariff threat on Mexico escalated. Mexican Foreign Minister Marcelo Ebrard said that American President Donald Trump's threat of punitive tariffs on Mexico would be devastating and would not stop waves of Central American migrants from crossing the southern US border, according to a Reuters report.
To add to the woes, results on factory activity across Asian and European nations showed contraction for the month of May. US manufacturing growth data released on Monday showed a further slowdown in May to its weakest pace in more than two-and-a-half years. Investors now expect an interest rate cut in Federal Reserve's upcoming monetary policy to push growth.
The possibility of a fall in interest rate and the looming uncertainities have investors betting their money on the safe haven bullion, pushing its price higher.