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Gold Prices In India Fall; Almost Erase August Gains

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Gold rates in India fell below the Rs 38,000 levels investor choose the US dollar amid Trump impeachment probe, pushing metal's price lower in the international market.

On MCX, gold futures were trading 0.09 percent lower at Rs 37,567 per 10 grams of 22 carats. Silver futures fell by 0.58 percent to Rs 46,515 a kilo on the Indian commodities exchange.

Gold Prices In India Fall; Almost Erase August Gains
 

These rates are close to the rates seen in the first week of August when gold rates in Delhi were at Rs 37,920 per 10 grams.

In the month August the precious metals made significant gains. By 3 September, gold touched Rs 39,885 per 10 grams and silver was priced at Rs 51,489/kg on the same day, marking their new all-time high.

This means the rates on Thursday have seen a massive drop of almost Rs 2,000 and Rs 5,000 respectively in less than a month from their respective highs.

On Thursday, prices of these metals in India saw a correction in line with global trend and also on account of recovery in the rupee's value on the back of positive domestic equities.

In the international market, gold fell by 2 percent on Wednesday as political uncertainties in the US drove investors to seek the safety of the US dollar.

Spot gold was down by as much as 2 percent to $1,501.55 per ounce, while US gold futures were down by 1.8 percent to $1,512.3 an ounce.

The dollar index hit a two-week high after Democrats in the US House of Representatives launched a formal impeachment inquiry into Trump as they accused him of seeking foreign help to smear Democratic rival Joe Biden ahead of next year's election.

Concerns of political uncertainty in the world's largest economy reduced the appeal of gold.

The US dollar is also considered as a safe haven metal among investors.

 

Further, the US imposed sanctions on certain Chinese entities for knowingly transferring oil from Iran.

Also on the radar is the risk from the long ongoing trade dispute between the US and China after Trump said at the United Nations General Assembly that he would not accept a "bad deal" in their trade negotiations. In the previous year, we have seen gold move in the opposite direction of the US dollar's movement as the American currency strengthened after the start of the US-China trade war.

This trend seems to have returned.

Gold also losses when equity markets gain. US markets jumped after Trump said that trade deal with China may happen faster than earlier expected.

However, considering the general gloom in geopolitical tensions in some of the major economies including the Middle East and the UK, a slump in economic activity in Europe and negative interest rates, gold is not likely to lose its appeal soon.

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