On Tuesday, gold futures (4 December 2020) on MCX opened at Rs 48,194 per 10 grams as international prices recovered from 5-month lows on mounting worries over a spike in COVID-19 cases that overtook optimism around the positive development of 3 viable vaccines.
Spot gold was up 0.4% to $1,784.37 per ounce after sharp losses in the previous two sessions.
In the global markets on Monday, the precious metal clocked its worst monthly fall in four years falling to $1,764.29 per ounce, the lowest level since 2 July. In India, commodity markets were closed for the morning session on account of Gurunanak Jayanti. In the evening trading session, gold futures closed lower at Rs 47,763 per 10 gm, mirroring movement in the international markets.
Rising coronavirus cases and poor macro data from the US attracted investors to the non-yielding bullion. In the last week, COVID-19 cases topped 1.1 million in the US, prompting fresh curbs in California.
Investors now await Federal Reserve chairman Jerome Powell's testimony before the Senate Banking Committee later on Tuesday, for clues on the direction of US' monetary policy. If the US Federal Open Market Committee meeting in two weeks shows more monetary accommodation it will restoke inflationary fears.
Most factors that drove gold prices to rally in 2020 remain intact.
The precious metal is seen as a hedge against inflation which is likely after the highly-anticipated large stimulus measures that could be announced by the US government to support its economy.
Meanwhile, the Indian rupee opened higher at 73.95 per dollar on Tuesday against Friday's close of 74.05, curbing gains in gold prices in India.